Borrowers say they'll switch if banks don't follow RBA

by Adam Smith30 Jan 2013


If the RBA moves on rates again in February, major bank customers may be looking elsewhere should the big four fail to follow suit.
A new study has found the vast majority of big four mortgage customers are open to switching lenders. The CUA Mortgage Survey has found that 78% of mortgage customers said they would switch or would consider switching if their bank failed to cut rates following an RBA move. Eighty-six per cent of major bank customers said they would switch or consider switching if they found an interest rate 50bps below that of their current lender. Seventy per cent said they would switch for lower fees and charges.
In spite of this, most Australians expect rates to go nowhere when the Reserve Bank meets on Tuesday. Fifty-three per cent said they expected the RBA to keep rates on hold. 
"The research reveals that while the majority of Australians believe rates will stay on hold following the RBA’s first meeting this year, opinions are split on the outlook for interest rates in 2013 and are equally
divided between those thinking rates will increase to those that think they will decrease," CUA general manager of products and marketing Jason Murray said.
Murray said 38% of the survey's respondents expected interest rates to rise over the remainder of the year, while 37% thought they would continue to decline and 26% predicted rates to remain steady.
Should rates drop, the majority of mortgage holders would apply the savings to their home loan.
“Despite the RBA’s efforts to stimulate the economy with rate cuts, it appears that if the RBA cuts the rate in February, Australians will look to make smart financial decisions. The majority (79%) of variable rate holders are likely to use the savings to make extra
repayments towards their home loan, while 32% are likely to spend it on discretionary goods and only 20% are likely to invest the money," Murray said.