The number of complaints about home loans in Australia has risen significantly amid issues with responsible lending and failures to provide assistance.
That's according to new data released by the Australian Financial Complaints Authority (AFCA), which found home loan complaints rose by 20% over the last six months of 2019 compared to the previous six months.
There were 2,201 mortgage complaints in that time, or 367 per month on average.
That's about a dozen a day.
The increased complaints come despite not one, but three cash rate cuts of 25 basis points occurring in that time frame.
AFCA Chief Operating Officer Justin Untersteiner said that it was disappointing to see an increase in complaints, but maintained that data transparency is important.
"Every six months, AFCA releases data which allows Australians to see how many complaints their insurer, bank, financial adviser, superannuation fund or other financial firm has received and how they have responded to those complaints,” Mr Untersteiner said.
"Rebuilding trust in the Australian financial services will be a long journey and one that requires effort across the entire sector."
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Smart Booster Home Loan
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Monthly repayments: $1,476
- Discount variable for 1 year
- No ongoing fees
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Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) owner-occupied home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.
Mr Untersteiner said the "dramatic" increase in complaints was driven by:
- Lenders failing to respond to requests for assistance
- Issues with responsible lending, and
- The conversion of loans from interest-only repayments to principal and interest.
"The data also shows that we are getting very few complaints about financial advice, just 30 per month, and complaints against debt buyers or collectors rose by just five per cent," he said.
"Our hope by releasing this data is that we see improvements and the industry takes action to reduce the number of complaints that end up at AFCA.”
Home loans weren't the most complained about product however: That dubious honour goes to credit cards, which attracted more than 2,700 complaints.
Home building insurance was the most frustrating insurance product meanwhile at 1,445 complaints.
Three of the big four banks led the charge for complaints, with CBA, ANZ and NAB attracting 3,404, 2,343 and 2,165 complaints respectively across various products.
Westpac on the other hand came fifth, one place behind insurer AAI.
In terms of location, most of the complaints came from customers in New South Wales with 6,266. Comparatively:
- Victoria had 5,557
- QLD had 3,610
- WA had 2,046
- SA had 1,115
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.
In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may inﬂuence the cost of the loan.
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