"Are you ready boots?"
Angry Westpac customers appear to be voting with their feet. Australia's largest mortgage broker AFG says a "large proportion" of its business in December came from Westpac customers switching other lenders in protest at Westpac's outsized December rate hike.
Although it won't reveal the number of customers who it switched it says anti-Westpac sentiment pushed refinancing to high for the year in December and saw the Commonwealth Bank displace Westpac as its largest source of mortgages.
"There are people who are fed up with Westpac and are making a stance," said AFG sales manager Mark Hewitt. "Normally people think its not worth their while to move for 20 points because rates could change again but in this case people are making a protest."
"It's hard to switch banks, but when you feel strongly about something you tend to endure a bit of pain to get your point across."
"There certainly haven't been people leaving in droves, and we have even been writing some new Westpac business to existing Westpac customers, but we are seeing a particular type of customer who feels strongly enough to vote with their feet."
Westpac disputed AFG's analysis. A spokesman told the Herald that new lending growth "remained strong".
Asked why lending growth should remain strong when Westpac's mortgage rates are well above those of other lenders he said the bank offered a good discount to "premium customers" and other benefits including zero credit card and account keeping fees.
Westpac had not noticed an "abnormal level" of refinancing in December. AFG might have been merely logging more inquires from disgruntled Westpac customers.
Westpac decision to push up its variable mortgage rates by almost double the Reserve Bank's 0.25 point increase in December has opened up the biggest-ever gap between the rates quoted by the major banks. A National Australia Bank mortgage is now 0.27 points cheaper than a Westpac mortgage, representing a saving of $50 per month on a $300,000 loan.
The consumer group Choice said the move by AFG customers was welcome but just a start.
"There's a public appetite for switching and some pioneers are already doing it. But they are going to be necessarily small in number until it is made easier to switch and borrowers know the interest differential will be maintained," said spokesman Christopher Zinn.
Westpac customers who want to switch to borrowers with which they do not already have an account will need to prove their identities all over again using documents such as drivers licenses and passports, establish savings and earnings records using bank statements and group certificates and documentation from their employers, to obtain or pay for a property valuation and to provide other documents on request including rates notices, superannuation statements and child support agreements.
"It needs to be much simpler in terms of the costs and paperwork," said Mr Zinn. "The government's bank switching package wasn't enough."
The AFG figures also reveal the near death of fixed-rate mortgages, with the proportion sold by AFG falling to an all-time low of 2 per cent in December, down from a high of 22 per cent two years before.
"You've got to get in early to get value from fixed rates. There was a window of about two weeks early from late March when you could get value before it became clear rates would move. After that the fixed rates fully priced in the expected hikes," Mr Hewitt said.
Loan volumes slid in October, November and December after the Reserve Bank's rate hikes. But the average mortgage size continued to climb until November, hitting a record $414,200 in NSW and $352,200 in Victoria.
Published in today's SMH and Age
. Thursday column: Happy new year - it's still hard to switch banks
. Westpac blows it - big time
. The mating call of the banks
. Westpac's gutsy, greedy, ineptly-handled cash grab