BANK ON IT
One of Australia’s biggest comparison websites finder.com.au is urging Australians to take advantage of the growing competition between financial institutions while they battle it out for market share, following the Reserve Banks’ decision to leave the cash rate unchanged at 2.50%.
The Survey found that the majority of experts are betting on interest rates to start rising next year, with the cash rate to continue to a “new normal” level of 4 per cent.
Michelle Hutchison, Money Expert at finder.com.au said that financial institutions will continue to compete for market share, despite rate hikes on the horizon.
“Our research shows that the power shift between the banks over the past financial year has resulted in more competition, particular- ly for lending products like home loans and credit cards.
“We found that the big four banks lost market share by 1 percentage point for owner-occupied home loans, while gaining 1 percentage point market share for personal credit cards.
“With home loan rates continuing to fall over the past year and more credit card balance transfer deals than we’ve ever seen, now is a great time to take advantage of the offers available before rates start to rise,” said Mrs Hutchison.
According to a finder.com.au analysis of Australian Prudential Regulation Authority (APRA) data, the big four banks lost 1 percentage point of market share for owner-occupied home loans since July 2013, making up 84 per cent out of all banks in June 2014, worth $696.6 billion.
On the flip side, the big four banks gained 1 percentage point in market share for personal credit cards, sitting at 84 per cent, worth over $34 billion. The increase in market share could be attributed to more aggressive pricing for promotional offers such as balance transfers, with ANZ for instance, now offering 0 per cent balance transfer deals for up to 16 months.
“While the cash rate might remain on hold for now, it’s likely to start increasing next year. And with financial institutions competing harder for your business, it’s worth keeping track of your banking products and make sure you’re getting a good value deal. It can make a big difference to your budget once interest rates rise.”