Changes to Credit Ratings
There are currently two Government instigated initiatives which have the potential to significantly change the Australian mortgage landscape.
The first and most headline-grabbing is the Royal Commission into the major banks. Whilst early days for this, we are certainly hoping that this will bring to the forefront some of the bigger issues and conclude with meaningful changes for Australian mortgage holders. For example,
rules around when can a bank raise an interest rate and under what circumstance.
The other is not so well known, but has the potential to be even more powerful! The system of Credit Ratings in Australia changed some years ago allowing the Credit Bureau to collect more comprehensive data. This brings Australia into line with most other developed countries. If you have never heard of this or do not know much about it, you are in the majority, as it has not been well communicated. It’s best explained this way.
At the moment, Bank A (your bank) has much information about you, especially if you have been a customer for some years and hold your transaction account, credit card, and mortgage with them. Bank B, where you have no history, knows little about your mortgage repayment history, your credit card repayment history, and general spending habits.
This more comprehensive data held by Bank A, which will all go towards your credit rating, will allow Bank B to know more about you and offer a better deal, now they can see you have a good repayment history and credit rating.
Overall, this will allow not just Bank B, but a range of other lenders to be able to offer more competitive pricing to those who have a good credit rating. Potentially great for you!
At ‘All About You’ Financial Solutions we have been watching this evolve, but the uptake of information being provided by major banks to the Credit Bureau was slow, as there was no mandate for banks to provide this data.
Enter Federal Treasurer Scott Morrison! In November 2017 the Federal Treasurer mandated major banks to provide this information to the Credit Bureau. He also mandated half of the data must be supplied by July 2018, and all of the data by July 2019.
"This regime should lead to one thing – a better deal on your mortgage, your personal loan or your business loan"
Scott Morrison, Federal Treasurer.
We’ll have more information for you as this new system evolves, but in the meantime, your Finance Manager will be happy to able to assist with any queries, or call us on (08) 9381 8311 or email us at