Banks feel pain as angry home loan customers turn to smaller lenders

ANGRY homeowners looking to dump expensive loans are turning to smaller lenders in droves.

Yellow Brick Road boss Mark Bouris said customers were angry over recent rate rises. Picture: Anthony Reginato

IT MAY have taken a set of outrageous pre-Christmas rate hikes but an angry mob of homeowners is on the move, following through on threats to ditch the big banks.

Australia's leading non-bank lenders have reported at least a three-fold increase in inquiries, the vast majority from customers looking to dump big bank home loans.

It's not only the major banks feeling the heat. Labor MPs are worried over the Opposition's attacks on the banks, which are resonating with the community.

The surge in demand has prompted one lender - Yellow Brick Road - to advance its branch expansion plans to cater for a flood of new customers taking advantage of its discounted variable interest rate of 7.34 per cent.

Yellow Brick Road boss Mark Bouris said there was a sense of anger over this month's big bank rate movement, led by the Commonwealth Bank's initial 0.45 per cent jump half an hour before the Melbourne Cup.

"We have seen a tripling in inquiries from borrowers - most have loans with the major banks," he said.

The National Australia Bank almost mirrored the CBA's move more than a week later with a 0.43 per cent hike, while ANZ and Westpac kept their increases to 0.39 and 0.35 per cent respectively.

This leaves the average big bank variable mortgage rate at around 7.80 per cent.

Boasting a rate of 7.12 per cent and offering $1000 to customers who switch mortgage, ING Direct has also seen a three-fold increase in inquiries that it hopes will lift it to Australia's fifth biggest lender.

Opportune Home Loans has had a four-fold increase in inquiries in the past two weeks, all chasing information on its 7.37 per cent variable rate.

Switching lenders could save customers $40,000 over the life of their loan, such is the gulf between big banks and their non-bank rivals.

Yesterday the Greens presented a Bill to Parliament that includes regulating ATM fees and requiring banks to provide fee-free accounts.

They also want a two-year freeze on bank interest rate rises above RBA increases.

Treasurer Wayne Swan said the plan to ration credit would lead to potential homeowners missing out on loans.

But Labor MPs said shadow treasurer Joe Hockey's campaign on interest rates was hurting them. They will raise the issue with Prime Minister Julia Gillard today.

"They are killing us with interest rates," one MP said.

"It is really biting."

However, it appears Opposition Leader Tony Abbott has come under pressure from his own party room to tone down the anti-bank rhetoric.