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ISCOVER
Staff Reporter
1300HomeLoan has accused One Big Switch of conducting a cynical bank-bashing campaign that offers false hope to borrowers.
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According to 1300HomeLoan’s managing director John Kolenda, One Big Switch’s ‘Truth in Banking’ campaign, which claimed banks were ripping borrowers off by not passing on the full RBA rate cuts, was futile and potentially misleading.
“This company is taking spin to a whole new level by pushing a Rate Gap Calculator that implies the banks should fully pass on cuts to RBA cash rates even though the RBA governor Glenn Stevens has repeatedly stated that is not the case due to their cost of funds,” Mr Kolenda said.
“This may be good for generating publicity for One Big Switch but the truth is that no-one can lend money at the rates implied by this calculator and unsuspecting borrowers are potentially being made to think they can save more than what is currently available in the market and are being burdened with a needless sense of grievance.”
Mr Kolenda said that everyone who understood the industry knew that the banks’ lending rates were based upon their overall cost of funds, with the official cash rate being only one small component.
“There is no way any lender could lend money at the rates that One Big Switch is suggesting they should because the price they pay for money from overseas and through term deposits has not fallen in line with the official cash rate,” Mr Kolenda said.
“Consumers thinking of signing up to this campaign only need to look at one line on the One Big Switch website which is their disclaimer where they admit that “the [rate gap] calculation is hypothetical and does not represent any actual or achievable saving.”
“In other words, there is no way that One Big Switch will be closing that gap for borrowers for the simple reason that no-one is going to lend money for less than they pay to raise it.”
Mr Kolenda said One Big Switch had drummed up public hostility to banks in the media with the Rate Gap Calculator in stories such as one that featured a young couple using the calculator to find out how much the banks had unfairly taken off them and it had encouraged them to call their bank and complain.
However, the company admitted in a discrete location on its website that the so-called “rate gap” was a meaningless number.
“On their website they say that “One Big Switch does not claim that this figure should have actually been saved, nor that lenders should always match the RBA’s movements,” Mr Kolenda said.
“Well, if they are effectively admitting that the Rate Gap Calculator has no useful information, then why did they make it and promote it.
“Consumers should be switching off One Big Switch because it clearly delivers a saving no greater than they could have got by shopping around themselves or visiting a mortgage broker.”
