Australians Changing Banks in Record Numbers: Small Banks Reporting Large Gains in Customers

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Mortgage broking firm, The Mortgage Gallery Rockingham, deciphers what the numbers mean to the average homeowner, and how they can take advantage of the new financial climate.

The Mortgage Gallery Rockingham

We work with all of the banks every day. We know who is offering what. And we can make it a lot easier for the consumer who doesn’t have time to scour a database of small banks for good deals.

According to the Australian Bureau of Statistics, 35% of housing loans taken out in 2011-2012 were refinancing loans on existing mortgages. According to the bureau, those loans were responsible for virtually all growth in home loans during that time period. Currently, banks refinance $1 billion in loans each week. The reason so many people are refinancing is a combination of lower rates from smaller banks, and the government ban on exit fees, which made it profitable for consumers to shop around for the best rates.

From June 2011 to June 2012, refinance loans increased 17% or $7.3 billion. Lending to buy houses actually decreased by close to $1 billion during the same time period. The smaller banks were the winners here, while the big four banks were the losers.

In a well-known and oft-cited figure, the big four banks hold 86% of housing loans in Australia. During the first half of this year, though, small banks accumulated 24% of the growth in home loans.

Treasurer Wayne Swan commented about the numbers: “People are taking advantage of our ban on mortgage exit fees. This has put more power in the hands of Australian families: they can walk down the street to another lender if their current bank isn't looking after them.”

So, what does this mean to those newly-empowered Australian Families?

Justin Smith, Principal at The Mortgage Gallery Rockingham, weighed in: “The exit fee ban has opened up a lot of options for a lot of families. We have definitely seen a large increase in refinancing loans as of late. People are realising that they can often save a lot of money by shopping around for lower rates than those they already have.”

Smith continued, “This is one instance in which I definitely recommend professional advice. Can you walk into a small bank and get the best interest rate available on the first try? Of course you can, but the likelihood is that you will have to do a lot of work to find the lowest rate. Also, mortgages are structured in many different ways, and it’s hard for most people who aren’t in the business to figure out exactly what they are getting. With a professional mortgage broker, there are no surprises. You know exactly what you are getting before you sign the papers.”

Smith was asked about the opportunities available right now: “The bottom line is that it’s a very good time to refinance. Smaller banks want your business, and they can often move a lot faster than the big four can. There will be a lot of times when the big four have the best deals, too, but right now, the smaller banks are aggressively seeking business, and they are doing it by lowering their rates and passing on some great savings to the consumers.”

Smith concluded, “We work with all of the banks every day. We know who is offering what. And we can make it a lot easier for the consumer who doesn’t have time to scour a database of small banks for good deals.”

The Mortgage Gallery Rockingham is a leading mortgage broking firm serving the Cockburn, Kwinana, Rockingham and Perth areas. Their professional mortgage brokers are experts at finding home loans or refinance loans, and matching the right buyers with the right banks.

To talk to one of their reliable mortgage brokers for a consultation, please check out their website: or call them directly at (08) 9527 1800.

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