SYDNEY, Australia – According to the latest data from the Australian Financial Complaints Authority (AFCA), the home loan complaints in the country went by around 20% during the last six months of last year.
Today, the data from AFCA that suggests a massive increase in complaints from borrowers went public. Based on the findings, from July to December in 2019, the ombudsman of the financial services sector in the country received around 2,201 total complaints from people regarding their home loans. From the numbers, there are approximately 367 complaints that the ombudsman dealt with every month for the past six months last year.
But despite the sharp increase in home loan complaints half of last year, it stays just at 6% of the total number of complaints received during the same period. The recorded total number of complaints is at 36,562.
Nonetheless, Justin Untersteiner, the chief operating officer of AFCA, said that the current figures are very disappointing.
From the data released by AFCA, there are around 49 complaints filed that are directly related to mortgage brokers. About 19 of that total complaints involved the BLSSA Ltd., which is under the ownership of the National Australia Bank. Meanwhile, 16 from the total number of claims are related to Mortgage Choice, while ten are concerning Bestwell Mortgage. The last four claims are concerning the Auscred Services, which currently holds the license as the credit assistance provider for Lendi.
Based on the figures, 38 complaints made are against mortgage aggregators. Out of the total 38 grievances, 15 are concerning Loan Market, while ten are against the Australian Finance Group, ten regarding Connective, and the last five complaints are against Finsure.
About 135 complaints recorded for the last six months of last year are about mortgage managers. The top four spots for those with the most significant number of claims made include a total of 29 against Bluestone Mortgages, followed by 21 concerning Mortgage House, 19 against Resimac, and 13 concerning Liberty Financial.
AFCA aims to help contribute to rebuilding the declining trust of the people in the financial services in the country, thus, the recent release of the data.
According to Mr. Untersteiner, transparency is a significant driver when it comes to the transformation in the sector. He stated that they have made incredible changes in the ways that they report and publish data as well as in their decisions to make such reports accessible to the Australian people.
About the recent data release, Mr. Untersteiner also said that there is a dramatic increase in the number of home loan complaints half of last year. According to him, the primary driver of such sharp upsurge is financial firms who have been failing in terms of the ways they respond whenever borrowers request for their assistance. He said that problems when it comes to responsible lending and the conversion of credits from interest-only to interest and principal dragged the rise in complaints even further.
Further, the AFCA CEO said that their primary objective by releasing the report is to see promising and more significant improvements in the sector. They also hope for the industry to take further measures to help substantially reduce the number of home loan complaints that goes into their doorstep.
Meanwhile, banks in the country try to recoup costs from the recent home loan cuts. The Commonwealth Bank of Australia cut their interest rates for all its savings accounts by around 0.30% yesterday. The interest rate cut is part of the CommBank’s efforts to recoup the price sustained from the full 0.25% home loan rate cut in March.
Two weeks ahead of the home loan reductions of CommBank, they slashed the bonus rate offered for its Goal Saver savings account by 0.25%. Meanwhile, the security savings account they are offering for pensioners went down by 0.25% and a decline of 0.30% for their Youth Saver account. However, the major left its Netbak Saver account, mostly unchanged at its ongoing rate of 0.10%.
Sally Tindall, the research director for the website Rate City in Australia, said that CommBank is among the six banks in the country to slash its deposit rates following the cash rate cut from last week. Ms. Tindall predicted that even more banks and lenders are going to follow with a similar move.
She also stated that it would be interesting to find out how far the major banks in Australia, such as NAB, ANZ, and Westpac, are going in terms of cutting their rates. Ms. Tindall also noted that these giant lenders already started to reduce their savings rates early in 2020.
She further commented that looking for savings account rates that are over inflation can be very challenging in the current low rate environment in the country. However, Ms. Tindall also said that it isn’t impossible.
The current highest rate available for a savings account is at 2.25%, which is available at Xinja Bank and neobanks 86 400. But, Ms. Tindal warned that such a high savings rate might not be there in the future.
Xinja, for one, announced the previous week that it is cutting its offers for new Stash savings accounts indefinitely, citing that they are focusing their efforts to take care of their existing clients.
Eric Wilson, the founder, and CEO f Xinja Bank, previously stated that Xinja would not follow most banks who are cutting their deposit interest rates following the RBA rate cuts and the increasing deposit flows. However, he did repeat that while Xinja presents a unique way of banking, the Stash account it offers comes with a variable rate. It means that the deposit rate for Stash account will go up or down anytime, he said.
With the seemingly turbulent times for lenders, Mr. Wilson said that they want to continue standing by the deposit rate they offer their customers since the beginning.
Meanwhile, the neobank expects to keep its deposit accounts rate at its current 2.25% with no string attached. They will also continue with paying the interest from the first dollar up to around $245,000, which they will continuously calculate daily and pau monthly.