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The federal government has announced a slew of measures to help Australians obtain better deals on their mortgages.
Federal Treasurer Jim Chalmers announced on 15 June that the Albanese government is implementing changes to help bank customers get better deals on mortgages and savings accounts through “more choice, lower prices and better services”.
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These changes aim to help create a more “dynamic, diverse and resilient Australian banking sector,” according to the Treasurer and put in place some of the recommendations from the Australian Competition & Consumer Commission (ACCC) Home Loan Price Inquiry and its inquiry into retail deposit products.
The range of measures being introduced aim to help Australians "find and switch to better mortgage deals and get better interest rates on their savings accounts". They include:
• Making the banks inform customers when their interest rate changes on their transaction or savings account and improve disclosure requirements for basic deposit products.
• Financial product comparison websites being required to better disclose what determines how products are ranked and the financial relationships with the recommended product
providers.
• Making it easier for customers to switch loans through direct and easy access to the forms needed to exit a mortgage (discharge forms).
• Working with banks to help enhance how customers are notified about bonus interest rate offers and when an introductory lower interest rate period ends.
• Asking Treasury to investigate how behavioural economics and prompts could be used in the banking sector to encourage consumers to switch to cheaper home loans and retail banking products.
The moves come following calls for a government response to the home loan price inquiry, as a means to improve transparency and competition in the home loan sector.
The inquiry, commissioned by the Morrison government in October 2019, reviewed the mortgage pricing process and made four recommendations to ensure the pricing practices of Australia’s financial institutions are better understood and made more transparent.
Given the change of government following the federal election in 2021, there had been no response to the Home Loan Price Inquiry. However, Jim Chalmers revealed last year that the Albanese Government would be responding to the inquiry recommendations, stating at the time: "Just as we want Australians to get a good deal on their mortgages, we want savers to get the benefits of higher interest rates."
A review into SME banking
Furthermore, the Albanese government has announced a review into the challenges faced by small and medium-sized banks.
Chalmers confirmed that this review will be headed up by the Council of Financial Regulators (CFR) in consultation with the ACCC.
“The review will focus on the role small and medium-sized banks play in providing competition in the sector and the regulatory and market trends affecting them,” Chalmers said.
“It will propose ways to improve regulation and ensure that oversight of these banks appropriately balances competition, innovation, and stability.”
This comes off the recommendation to look into regulatory settings for small and medium-sized banks as outlined in the Better Competition, Better Prices report.
The review also aims to assess how smaller banks source funding, including the role of covered bonds, and consider whether regulatory arrangements for new entrants can support additional competition in the sector.
The Better Competition, Better Prices report put forward 44 recommendations to government after 14 months of evidence gathering and analysis from numerous sectors of the economy.
The committee received more than 60 submissions from stakeholders across industry and government and followed up with many stakeholders and other experts at a series of 18 public hearings.
[RELATED: Government should look to pilot tracker mortgages, says competition report]
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