One Big Switch targets miserly mortgage lenders in new consumer awareness campaign

One Big Switch, the consumer discount advocacy company, has returned to its roots with a new mortgage awareness campaign targeting lenders who don’t pass on RBA cash rate cuts in full.

Called “Truth in Banking” and with the slogan "We mind the gap" it asks borrowers to enter in the details of their current mortgage including their lender, interest rate, amount owed and any fees they are charged.

A trademarked “Rate Gap calculator’ gives subscribers an indication of how much extra they have been paying to date and on a monthly basis, based on RBA cash rate movements and their lender’s response to them.

Subscribers can sign up over the next 17 days with the campaign attracting just under 3,400 participants at last count. Subscribers will then receive information about future discounting campaigns.

One Big Switch was founded by Harvard MBA graduate Paul Hunyor and former press secretary to Kevin Rudd Lachlan Harris in July 2011 with funding from venture capital fund MH Carnegie & Co (MHC), founded by Mark Carnegie and advertising veteran John Singleton.

It launched with a campaign offering borrowers the opportunity to be part of a mortgage discount offering.

Around 40,000 borrowers  signed up to this campaign last year have refinanced through one of these lenders with 1,600 choosing to refinancing through non-bank lenders Resimac, FirstMac, Mortgage Ezy, Mortgage Point and IMB Building Society.

One Big Switch is seeking to sign on 25,000 mortgage holders to the new campaign, which runs until November 2.

A spokesperson for One Big Switch says the campaign is all about “transparency, creating awareness and consumer empowerment”.

"The purpose of the campaign is find 25,000 consumers to calculate the rate gap. The rate gap is the difference between RBA cash rate movements and rate movements by individual lenders.  

"Throughout the year One Big Switch members are offered discounts on many household bills, including their mortgage, but this campaign is not about discounted mortgages."

One Big Switch campaigns are being led by Christopher Zinn, former the head of communications at consumer watchdog Choice.

“The banks know exactly how their policies of not passing on the benefits of cash rate changes impacts on their bottom line in a positive way,” says Zinn.

"But the consumer, until now, has been largely oblivious of the negative effect  unless they had the will and technical skills to juggle all the numbers.

"This is one reason we have launched the ‘ We Mind the Gap’ campaign. To arm ordinary people with information they may need to make better decisions."

The latest campaign is being carried out in partnership with Channel 7 and being promoted via Channel 7 News, Sunrise and Today Tonight.

According to Strachan Taylor, head of mortgages at One Big Switch, a look back over the last 20 years reveals that banks have often not always passed RBA cash rate moves completely and immediately on.

“In fact over the last decade they have done so 55 times,” he says.

“Since 1990 the spread between the RBA cash rate and the general bank lending rate grew to 4.75% by mid-1993, and remained around 4% until late 1994, dropping to 3% in late 1994 and from mid-1995 rapidly fell to its minimum of 1.7% in 1999.”

He says the spread remained tight at around 1.8% until 2008 when the GFC hit, following which spreads once again quickly began to widen to 3.4% today.