“Australian Mutuals safe & competitive” says Treasurer Swan

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Treasurer Wayne Swan highlighted the safety, value and competitive alternative of Australia’s credit unions and building societies in his Economic Note from yesterday, Sunday March 28.

Treasurer Wayne Swan highlighted the safety, value and competitive alternative of Australia’s credit unions and building societies in his Economic Note from yesterday, Sunday March 28.

“Last Tuesday we also saw the potential for our smaller lenders to put more competitive pressure on the big banks when CUA, Australia's largest credit union, announced it would cut its variable home loan rate by 25 basis points for all customers, to be more than half a per cent lower than the average of the major banks – or $1,153 cheaper per year for a family with a $300,000 mortgage.

“I've always been a big believer in the capacity of Australia's mutual credit unions and building societies to provide a safe and competitive alternative to the big banks. Of course, they meet the same high standards of prudential regulation as our banks, as they are supervised by APRA in the same way. And all deposits held with a credit union or building society are backed by the Government's Financial Claims Scheme up to $1 million – just like bank deposits – with this cap being reviewed for all in October 2011. So Australians can have absolute confidence in the safety of their money wherever their deposit is held.

“Some 4.5 million Australians are members of a mutual, but many others may not be aware of the critical role they play in putting competitive pressure on the big banks. A comparison of recent independent ratings data shows the best standard variable home loan rate available from a mutual is something like 80 basis points below the average of the major banks, and that mutuals are 34 basis points cheaper than the big banks on average.

As I said last week, the global financial crisis created some significant challenges for competition in the mortgage market. But I'm really encouraged to see our smaller lenders, including our mutuals, helping to put competitive pressure on the big banks, and I'll continue to support them all the way on this,” said Mr Swan.

To access the full text of yesterday’s Economic Note, go to: http://www.treasurer.gov.au/DisplayDocs.aspx?doc=economicnotes/2010/012.htm&pageID=000&min=wms&Year=&DocType=4

“Australians looking for competitive rates and loans should look no further than a credit union or a building society. Find one close to you, at coba3.nexusone.com.au” said Abacus – Australian Mutuals CEO Louise Petschler.

For more information, please contact:

Pamela Eldridge
Senior Adviser – Media, Public Affairs
02 8299 9024, 0423 843 790,
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