Banks In Australia To Offer Better Loan And Mortgage Deals
As part of the Australian Government’s final report of the independent review of Small Amount Credit Contracts (SACCs), the treasury is passing a new regulation that will pressure banks to give better credit card and mortgage plans to people who pay their credit card and loan dues on time.
This comes as good news for Australians since banks have always focused on penalizing bad payers instead of rewarding punctual ones. Good payers will have access to better deals on their mortgages, personal and business loans.
Treasurer Scott Morrison is set to announce the new credit regulations, whose first leg will be applicable to Australia’s four biggest banks: Westpac, National Australia Bank (NAB), Australia and New Zealand Banking Group (ANZ), and the Commonwealth Bank of Australia.
Good to Go Loans
In a statement, Morrison said,
If you have a good credit history—you’re paying down your mortgage, you haven’t missed a payment on your car loan and your credit cards are under control—you will be able to demand a better deal on your interest rates, or shop around, armed with your data
Morrison also believes that the new regulation will lead to better competition in lending and lowering of loan costs, which will ultimately produce better financing options for Australian households and small businesses. Another key component of the new comprehensive credit reporting regime is that lenders are obliged to report the entire credit history of customers, good or bad. Morrison believes that enforcing transparent credit history data reporting will move lenders away from focusing on bad credits scores.
Bigger data means smaller lenders will be able to make better risk assessments, and therefore potentially offer better deals to struggling customers. This reform has been in the works for quite a while now and smaller lenders are finding the new rules amicable to their businesses.
Stuart Stoyan, founder and CEO of Melbourne-marketplace lender MoneyPlace believes that it opens lower interest rates and a better access to credit to consumers, especially when the borrowers display good credit history. Under the plan, the four banks will be obligated to turn over at least 50 percent of their credit data by July next year, when the initiative will be implemented. Full credit data must be ready to report in July 2019.
In the long run, the Turnbull Government plans to extend the comprehensive credit reporting system to other industries. Australians can expect bigger savings and deals from gas and electricity companies as well as phone service providers in the near future.
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