Greater Building Society chief executive Don Magin has welcomed today’s Australian Government package of reforms announced by Federal Treasurer Wayne Swan saying they will help building societies to keep up the pressure on the major banks and offer a safe and better banking alternative for Australian consumers.
Mr Magin said that the reforms appear to be a sensible and prudent way to allow a fifth pillar to grow and compete fairly with the big four banks. He said that the package of reforms will help to boost competition by ensuring a level playing field.
He said one of the most important and immediately beneficial measures will be the community awareness campaign to debunk the myth that banks are somehow safer than building societies.
“The Greater is subject to the same regulatory system as the major banks, our capital adequacy ratio is double the regulatory requirement and higher than the major banks, and our ratio of impaired loans is a very low 0.036%,” Mr Magin said.
“The Greater already offers lower home loan interest rates, low fees and better service than the banks but one of the major issues we face in attracting customers is the wrong perception that somehow we can’t offer what the banks offer or that we aren’t as safe,” he said.
“Measures that remove unfair exit fees and boost consumer flexibility to transfer deposits and mortgages will help make sure consumers are not unfairly locked into one provider and reward those financial institutions that offer consumers a better deal and all round outstanding service.
“The Greater already does not charge the sort of exit fees or up-front fees that the Government is banning.
“The cost of funds to support our lending is higher for building societies like the Greater than it is for the banks.
“Measures to secure deposit funding through the government protection of deposits, as well as additional Residential Mortgage Backed Securities funding, are essential for ensuring the Greater can continue to offer better rates than the major banks.”
Mr Magin said that in this debate it is important to recognise that building societies like the Greater were already offering better deals than the banks and that consumers can already switch today.
“Our staff will do the work for customers that are sick of the major banks and wish to switch to a better deal.”
“My best piece of advice to consumers wishing to switch is to check the comparison rate or true rate of any loan and to ask about ongoing fees and charges.
“We already have the help of Jerry Seinfeld to raise awareness that we are an effective alternative to the major banks, but we also welcome the support of Government to promote the strength and stability of the mutual sector.”
“The focus of any reform should be on boosting competition to ensure real choice for Australian banking consumers.”
Example
Greater’s basic home loan rate: 6.94%
Westpac discounted package rate: 7.16%
Greater standard variable rate: 7.30% (Comparison rate 7.30%*)
Westpac standard variable rate: 7.86% (Comparison rate 7.99%*)
On current standard variable rates for a 30 year loan, a Greater customer borrowing $250,000 is $1164 year better off than if they borrowed from Westpac. A person borrowing $400,000 is more than $1940 a year better off with the Greater. |
The Greater Building Society is a Top 500 Australian private company (BRW 2010) with assets worth more than $4 billion. It provides financial services to almost 250,000 members in the Sydney, Hunter, Central Coast, Illawarra, North Coast, New England, and Western regions of NSW as well as in South-East Queensland and Townsville. The Greater has been named Australia’s Building Society of the Year in both the 2010 AFR Smart Investor Blue Ribbon and Mozo People’s Choice awards.
Terms, fees and charges apply to all loans
* Based on an amount of $150,000 over a term of 25 years. Comparison rate is true for examples given and may not include all fees and charges. Different terms, fees and charges may result in a different comparison rate.
