Virgin chief Richard Branson says that 800,000 customers signed up for the original version of the Virgin Money credit card, first offered in 2003 through Westpac. Branson says that Westpac turned a couple of million customers away, however, and that it ultimately poached those Virgin customers it signed up when the joint venture was abandoned. Virgin Money is now marketing credit cards once again in conjunction with Citibank. Deposit products are also on offer.Source: Sydney Morning Herald
Research by East & Partners indicating that while there is growing dissatisfaction among small firms with their banks, fewer of them were prepared to switch lenders. Eighty per cent of responses from 525 firms in the $1 million-$20 million turnover category said their banks had shown little or no loyalty, while nearly half said the cost of loans had risen in the past six months.Forty-two per cent said access to credit and the cost and conditions attached to lending were holding back expansion, compared with 23 per cent who said cash flow was the main hindrance and 20 per cent who cited lack of equity capital.Source: Sydney Morning Herald
The competition regulator yesterday gave further endorsement to the threading together of automatic teller machine networks in order to support competitive forces in retail banking. The ACCC yesterday released its draft determination clearing the agreement between Bendigo and Adelaide Bank and Suncorp Metway to not charge fees to each customers for use of ATMs.The two banks announced the plan in December last year and the ACCC provided interim agreement last month. The fee free arrangement (which may save customers $2) came into affect earlier this month. In the draft the Australian Competition and Consumer Commission noted that in past inquiries into takeovers of retail banks that the extent of a financial institution’s ATM network was taken into consideration by consumers in choosing between financial institutions.
It also said that the physical distribution of banking services was a key determinant of consumer choice in some retail banking products such as transaction accounts.The ACCC said this applied to small business and agribusiness products as well as consumer accounts. Credit unions already have a similar arrangement in place with National Australia Bank over waiving fees on ATMs. Cashcard also has a couple of minor arrangements in place with very small banks.Source: Banking Day
Westpac aims to overhaul and centralise its online banking services, using a new system that will cater to customer segment, including individual, business banking and corporate services.Westpac hopes to migrate customers to the new system by the end of 2011. Around two million customers use online banking services at Westpac, including subsidiaries St George and BankSA.Features of the new system include language settings, customisable interface, support for mobile platforms and personal financial management tools, Fiserv said.Source: Banking Day
Mortgage applications rose 2.3 per cent in the June quarter, but credit card applications dropped nine per cent, credit agency Veda Advantage said.Veda's latest quarterly consumer credit demand index tracked credit inquiries over the June 2010 quarter. It showed mortgage applications firmed 2.3 per cent compared to the March quarter. But mortgage applications fell 20.3 per cent compared with the June 2009 quarter, as the first home owner grants were wound back, Veda said in a statement.Veda spokesman Chris Gration said the credit quality of mortgage applicants who applied when the Government offered the first home owner's grant had improved marginally. "So there's no sign in Australia of that (US) sub-prime bubble happening,'' he said.Applications for credit cards have been falling steadily for two years, and dropped another nine per cent in the June quarter, compared to the March quarter, Veda added. There was also a 4.8 per cent decline in personal loan applications over the same period.Veda measures the adverse rate of credit, that is the rate of applications with defaults or bankruptcies."During the last couple of years, the adverse rates fell,'' Mr Gration said."Credit quality got better and it's just started to flatten out. Over the last two years households have adjusted to the tougher economic conditions by being more cautious and people with poor credit quality have stayed out of the market.''Source: News.com.au
Inflation rose less than expected in the three months to June, easing pressure on the Reserve Bank to raise interest rates at its next meeting in August.The consumer price index, a broad gauge of inflation in the economy, increased by 0.6 per cent in the June quarter from 0.9 per cent in the three months to March, according to the Australian Bureau of Statistics. Economists had tipped CPI would come in at 1 per cent for the June quarter.The RBA has raised interest rates six times since October as the economy rebounded from a slowdown. Prior to today's CPI release, markets were rating the chance of another rate rise when the bank's board meets next Tuesday as less than a one-in-three probability.Source: SMH
Collecting reward points for flights and shopping freebies is a waste of time and money for the average credit card customer, researchers say.Some schemes leave consumers out of pocket because the annual fee costs more than what you get back in return. On the flip side, big spenders who carefully choose whether they want flights, cash or shopping vouchers and pay off bills before being slugged the stellar interest rates on rewards cards are reaping benefits.More than 10 million credit and charge cards of Australians are linked to rewards. The loyalty cards account for more than half the market, and typically attract the highest interest rates and an annual fee.The latest report follows a separate survey by consumer group Choice that warned cardholders spending $1000 a month were taking on average more than five years to earn enough points for a $500 digital camera, and needed to splurge $6600 on an average card to earn enough points for a $50 toaster.Credit card analyst Mike Ebstein, of MWE Consulting, said consumers putting less than $30,000 a year on their plastic and failing to pay off accounts in full each month should opt for a no-frills card with a low interest rate.Providers had been steadily increasing annual fees or lifting the number of points needed to get rewards since Reserve Bank regulation of transaction fees cut their income, he said.Source: Herald Sun
Sir Richard Branson today announced a new era of competition for the Australian banking industry, when he launched the first phase of Virgin Money’s new range of banking products. Branson signalled Virgin Money’s intent to shift the balance of power away from the ‘Big Four’ banks.Speaking in Sydney this morning, he said, “Virgin Money is here to make all Australians better off. Today we’re launching the first in a range of new products starting with two credit cards and an online savings account – all of which are best in class. There is no better time to offer Australians a genuine alternative with simple and fairly priced banking products in an industry where there’s less competition today than ever before. This is classic Virgin territory,” he said.Richard Branson added, “Yes, Australia steered itself superbly through the Global Financial Crisis, but unfortunately this came at a price: the elimination of genuine choice. The finance sector in Australia has become highly consolidated and is now dominated by the Big Four, which results in the average Aussie getting less choice. Virgin Money is out to make a fair profit – not the most we can get away with. We’re here to shake up financial services in Australia as we’ve done in air travel.”Virgin Money’s new range of products will be delivered through a strategic alliance with Citibank Australia.Source: Virgin Money
A report by Mintel Comperemedia found that 70 per cent of adults who use the Internet use online banking. Another seven per cent have signed up for the service, but have never used it. Consumers aged 25 to 44 are slightly more likely than their counterparts to use online banking, with 79 per cent reporting usage. Banks are pushing these services, as approximately 40 per cent of all checking direct mail offers include a mention of online banking.“Despite the high penetration, banks are still eager to increase the usage of online banking,” says Susan Wolfe, vice president of financial services at Mintel Comperemedia. “It’s no secret that online banking creates deeper relationships between banks and customers, so banks are keen to pull in more users.” Ninety-three percent of respondents use online banking to check balances, 38 per cent use it to receive account alerts and 65 per cent use it to transfer money. Thirty per cent log on to pay their mortgages or credit cards issued by their banks.Source: Inside Retailing Online
Sydney’s auction clearance rate jumped up this weekend to 69 per cent from 55 per cent last week. There were 349 residential property auctions held in Sydney on Saturday, which was also up on last week when there were 318 auctions. On the same weekend last year, there were 263 auctions held in Sydney with a clearance rate of 68 per cent.In Melbourne there were 588 auctions held this weekend with a clearance rate of 56 per cent, down from last week when 66 per cent of 558 auctions produced a sale on the day. On the same weekend last year, 80 per cent of 429 auctions held in Melbourne produced a sale. In Adelaide, 68 per cent of 33 properties produced a sale. In Brisbane, 25 per cent of 44 properties listed for auction sold on Saturday.Source: Australian Property Monitors
Borrowers face a ‘double whammy’ of interest rate rises imposed by the RBA in response to higher expected inflation numbers and interest rate rises imposed by banks as they move to shore up their profit margins.The official headline inflation rate is currently just above the RBA’s target range of 2 – 3 per cent. LoanMarket CEO Dean Rushton said “It is not a matter of if banks will lift their rates but when.” Rushton predicted banks will raise their rates independently of the RBA soon after the federal election on August 21.Source: Herald Sun
While floating rate mortgages will rise again thanks to Reserve Bank governor Alan Bollard, the good news is they probably won't rise as much or as fast as previously expected.
Reserve Bank Governor Alan Bollard raised the Official Cash Rate (OCR) a quarter point to 3% as expected, while predicting a less aggressive path for further increases, given subdued domestic demand and a fragile global economy.
The Reserve Bank today increased the Official Cash Rate (OCR) by 25 basis points to 3%.
Reserve Bank governor Alan Bollard will probably raise interest rates next week, despite recent data, particularly on the housing market, retail spending and inflation, being softer than expected.
Two non-bank lenders are pulling out of the home loan market because of a lack of funding.
The Reserve Bank of New Zealand should stop raising interest rates, amid worrying evidence that the economy recovery is stalling, says New Zealand Institute of Economic Research Quarterly Survey of Business Opinion chief economist Shamubeel Eaqub.
Kiwibank has cut 31 basis points off its two-year fixed home loan rate, reducing it from 7.30% which is the median for all banks to 6.99%.
Kiwibank has cut 0.31% off its two-year fixed home loan rate, reducing it from 7.30% to 6.99%.
Net new lending on mortgages by banks is slowing markedly with three of the big four banks punching well below their weight, their general disclosure statements show.
NZF is starting to compete with banks for home loan business following the success of its $100 million securitisation programme.