Wednesday, 12 November 2008
Robertson Electorate: Interest Rates
I rise to speak on a matter that actually does matter to my constituents, to bring to the attention of members the plight of one family in my electorate of Robertson during this time of economic uncertainty. At a time when households in Robertson are struggling with rising living costs, including real pressure in relation to paying crippling mortgages, this couple—to protect their privacy I will call them Michelle and Tony, which are not their real names—contacted me recently. Michelle is an employee and her partner, Tony, runs his own business. As part of that business Tony took on a low-doc home loan with GE Money. This loan carries a high interest rate of 10.1 per cent. In October this year Michelle and Tony wrote to me and raised concerns that, despite recent drops in bank home loan rates and, of course, the Reserve Bank’s drop in home loan rates, GE Money had decided to pass on none of the recent one per cent drop in home loan interest rates to their home loan customers—a complete disgrace. Subsequently, GE Money also failed to pass on the recent 0.75 per cent reduction provided by the Reserve Bank. Furthermore, Michelle has been told by the bank that they face a penalty of $5,000 if they choose to move their loan from GE Money to any other lender.
The Reserve Bank’s recent cuts in official interest rates have been welcomed by many Australians as a timely response to the weakening economic outlook across the globe and around Australia. While the major banks have not passed on all of the Reserve Bank rate cuts to customers, their actions in passing on most of the cuts have been greatly appreciated by those striving to buy their own homes. The actions of non-bank mortgage lenders, however, leave a lot to be desired. GE Money now, following the acquisition of AFIG group, which includes Wizard Home Loans, Australia’s largest wholesale mortgage funder, has combined assets of $38 billion in Australia and New Zealand.
Globally, GE Consumer Finance are a market lender with services in 41 countries, assets of $117 billion and more than 100 million customers worldwide. GE have approximately 3.2 million customers in Australia, including 350,000 mortgage customers. Despite this financial strength, they have seen fit in recent times, with the difficulties faced by their customers, to pass on none of the reductions. I can only say that it is a disgrace. I call on them to immediately pass on the reductions in interest rates that the Reserve Bank has provided.