Borrowers Ready to Make Switch
Mortgage holders are increasingly willing to switch lenders in response to the failure of the big banks to pass on Reserve Bank interest rate cuts. An Ernst & Young report found that 66 per cent of people think there are better deals available than their present loans. However, if lenders wanted to take advantage of people's desire to switch, they had to simplify their home loan products. Almost a third of respondents who searched for information about mortgages gave up, citing choice overload and complex information. Ernst & Young Customer Leader, Advisory, John Rolland said banks needed to ensure the information available via all their channels was in plain English and provided real comparisons for customers.
“In other words, it doesn't require high levels of financial literacy to make sense of it.” The Reserve Bank cut its cash rate by 25 basis points in October, but major banks cut their variable home loan rates by less than that, citing high deposit costs.