The Echidna: Are all banks still behaving badly?

Banks are still bastards.

It's been four years since Banking Royal Commissioner Kenneth Hayne allowed us shocking insights into the way banks and other financial institutions behaved. None of it was pretty.

Charging dead people. Charging fees for no service. Selling people insurance they could never claim on. Overcharging fees endlessly. Honestly. They are the worst.

So it's devastating to know banks are still behaving badly.

Here's the thing - while the Reserve Bank of Australia, newly governed by Michele Bullock, has kept the cash rate on hold at 4.1 per cent, the banks are not having any of that. Nearly half of all lenders have increased their variable mortgage rates since July - that's exactly the same time period as the hold, hold, hold, hold of the RBA. We are all struggling with the cost of living yet the banks continue to raise rates. While banks are delighting in their comfy bottom lines, the rest of us are freaking out about bills, bills, bills.

Canstar, a financial comparison site, says even the big banks are on the naughty list of the 43 banks (of 93 institutions on the list) who've snuck in rate rises since the RBA held the rates. Good to know 24 lenders also cut variable rates.

The average variable rate increase was 15 basis points. Now, who knows what that actually means for us as individuals with our own mortgage arrangements so I asked Steve Mickenbecker, Canstar's finance commentator, if he could give me a bit of a general overview. He says that on a $500,000 loan (that's under the average new loan of $580,000), the interest rate rises since April 2022 are about equivalent to $1200 a month. And every 15 basis points is another 65 bucks.

Oh my god - $300 extra a week when none of us has had a pay rise in yonks.

And here's what really annoys me. While banks are price-gouging us poor saps who are mortgage owners, they are also relentlessly cutting interest rates on term deposits, according to Mozo, another financial comparison website. Anyone careful (or lucky!) enough to have any amount put away is also missing out.

Swear to heaven, I can hardly wait for the findings of Australian Council of Trade Unions' Price-Gouging Inquiry, headed by regulatory strong guy and consumer champ Allan Fels. Sure, the inquiry is about the true cost of record post-pandemic corporate profits to workers. I hope this also extends to workers who are paying increased mortgage repayments while bank profits are bloated.

Steve Mickenbecker explains: "Banks are dealing with wholesale funding costs so it's not surprising to see their rates go up."

His advice is to ring the bank and negotiate (because no-one wants to lose business right now). If that doesn't work, refinance! In the meantime, cut back everything! And if that doesn't work (and some of us have dug ourselves into bad places because of the combination of inflation and interest rate rises), tell the bank you are experiencing hardship.

In 2019, University of Melbourne researchers said about one third of us were dissatisfied with our financial situation. The reason? A lack of trust in financial institutions and advisors. And why the lack of trust? More than half of us had experienced an issue with our financial service providers in the last five years. They estimated the cost of those issues to Australian households was over $200 billion.

Look, hiking up mortgage rates isn't as emotive as ripping off the dead and their beneficiaries. It's not even as emotive as charging for no service. But these increases are just continuing to make banks rich and leave the rest of us struggling.

HAVE YOUR SAY: How has your bank behaved on mortgage rate rises? Do you feel like it's worth your while having a conversation with your bank about your situation? Are all banks bastard-adjacent? Email your response to echidna@theechidna.com.au.

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IN CASE YOU MISSED IT:

THEY SAID IT: "In almost every case, the conduct in issue was driven not only by the relevant entity's pursuit of profit but also by individuals' pursuit of gain, whether in the form of remuneration for the individual or profit for the individual's business. Providing a service to customers was relegated to second place." - Banking Royal Commissioner Kenneth Hayne, 2019.

YOU SAID IT: I asked whether you'd installed or benefitted from solar power and/or a battery at your house.

Garry J says: "As a citizen soldier I remember 'defending' the Lucas Heights reactor in Sydney and this is still working after all those years ... and they say nuclear is too expensive?"

Daniel J had to chop down trees because they shaded his solar panels: "I fear the real neoliberal agenda is for all-and-sundry to continue to be connected to privately owned water and energy supplies so that we continue to consume ourselves out of existence. Yep, I bought lots of panels and a big battery - dreaming of self-sufficiency. Unfortunately I'm still connected to the grid spending my hard-earned to electrify my life."

"We switched to solar at home a year ago and while an expensive investment upfront (note 'investment', not 'cost') and a small change of routine, our bill is under 1/4 of what it was," writes a happy Jane.

"We haven't installed a battery yet, as want to wait to get a bidirectional Electric Vehicle so we can essentially use the car as home battery (V2H) or even to sell it back into a community grid (V2G). The sooner we get access to more affordable vehicles and have the proper infrastructure (both in terms of charging and grid infrastructure across the nation and local communities), the sooner we can ramp up the benefits - both to the pocket and to the climate".

Hilary - and others - pointed out: "One thing you didn't mention was the very poor feed-in tariffs. At about one third of what we buy power in from the grid is wrong."

Stuart doesn't think the increasing number and intensity of bushfires is anything to worry about. "'The consequences of our mismanagement of the climate'? That's about the most ridiculous statement I have ever read, Jenna Price! We must have been mismanaging climate for thousands of years."

Lucky Margaret used the ACT government scheme to have solar panels installed with a 10-year interest-free loan and then another ACT government subsidy to install two batteries. "We have been bill-free ever since. Shine sun, shine!"