Bank home loan customers dissatisfied
Over the last 12 months, satisfaction amongst mortgage holders with the major banks has dropped by 2.8 percentage points to 75.4%, according to new data from Roy Morgan Research.
This was a significant drop compared to non-mortgage customers which fell by only 0.4 percentage points to 80.5% over the same time period.
The Commonwealth Bank of Australia has the highest satisfaction rating amongst home loan customers with the big four banks at 78.0%. This is followed by the Australia and New Zealand Banking Group (75.9%), National Australia Bank (72.9%), and Westpac (72.6%).
The non-majors received much higher satisfaction levels amongst home loan customers. ING Direct led the pack with a 94.8% rating followed by Bendigo Bank with 94.5%.
“Despite very low loan and deposit rates that favour borrowers, overall bank customer satisfaction is currently being adversely affected by the fact that only 75.4% of the big four banks’ home-loan customers are satisfied,” said Norman Morris, industry communications director at Roy Morgan Research.
“What’s more, the satisfaction gap between them and other customers (80.5%) is widening. With banks recently announcing ‘out of cycle’ increases in loan rates, borrower satisfaction is expected to decline even further.”
Morris said that while customer satisfaction with the big four banks has plateaued over the last three years, this is now starting to show signs of decline.
Economist’s radical plan to cut bubble lending
To stop the ever increasing levels of debt in Australia, one economist believes that there needs to be a hard reset of private debt levels via a “people’s quantitative easing”.
In an interview with the Australian Financial Review, author and economist Steve Keen, outlined his two-step plan to reduce household debt from current levels of 120% to between 50 and 100%.
The first step involves banks using government cash injections that reduce account holders’ existing debt. Customers with no debt would receive cash.
Keen said this instalment would be a bit larger than the $1,000 stimulus Kevin Rudd offered in 2009.
“In anything like this, which hasn’t been tried before, I would want to do it in small doses,” he told the AFR.
Radical yet simple reform of the banking sector would then be required, he said.
“What I want to do is bring in a range of bank rules which would limit the amount of lending you can give against an asset to some multiple of the income-earning capacity of the asset.”
For instance, banks could put a loan limit of $500,000 on an estimated annual rental income of $50,000. This ensures that the bidder for the house with the most savings who is more capable of handling the debt comes out as the winner.
“I want to cut off the asset bubble lending. When you look at the empirical data, overwhelmingly it’s leverage that determines asset prices. You have this positive feedback loop between lending and asset prices and that’s how you get the bubbles we’ve got. These guys are making money by creating Ponzi schemes.”
[1]”YIP mobile”, M.yourinvestmentpropertymag.com.au, 2017. [Online]. Available: http://m.yourinvestmentpropertymag.com.au/news/1-in-4-big-bank-home-loan-customers-dissatisfied-229353.aspx. [Accessed: 11- Jan- 2017].
[2]”YIP mobile”, M.yourinvestmentpropertymag.com.au, 2017. [Online]. Available: http://m.yourinvestmentpropertymag.com.au/news/economists-radical-plan-to-cut-bubble-lending-229352.aspx. [Accessed: 11- Jan- 2017].
