Trending Financial News 20 August

Citi credit cards get a Buy Now Pay Later option

Citi Australia cardholders will get the option of paying for goods from big online retailer Kogan with interest-free instalments.

Following the success of Afterpay, Zip and other Buy Now, Pay Later services, Citi will add an instalment repayment option for credit cardholders who make purchases from the Kogan website.

Compare credit cards from Australia’s banks, credit unions and other credit card issuers at InfoChoice.

Bendigo customers love their credit cards

Bendigo Bank credit card customers have given their bank the highest customer satisfaction rating of any credit card issuer, according to new research from JD Power.

The next highest customer satisfaction ratings have been achieved by American Express and Commonwealth Bank.

More credit card users are choosing to hold just one credit card, rather than a number of cards according to JD Power.

The proportion of cardholders who have only one card has increased from 56 per cent last year to 61 per cent. Twenty-one per cent of cardholders said benefits and services were the reasons they chose their primary credit card.

Visa eyes the Buy Now Pay Later market

Visa has begun a pilot to offer a Buy Now Pay Later service to Visa credit card holders.

“Visa’s instalment solution is in pilot in select countries and scheduled to be available globally in 2020,” a spokesperson told Banking Day.

Visa says the global Buy Now Pay Later market is worth more than $1.2 trillion and growing by 15 per cent per year.

Buy Now Pay Later is eating into credit card market share around the world. Visa says half of all credit payments, by volume, in Brazil is now Buy Now Pay Later.

Big banks reporting rising home repossessions

Westpac has reported an increase in the numbers of home loans falling behind on their repayments. Other banks have also reported an increasing number of borrowers feeling mortgage stress.

Westpac reported that the proportion of home loan borrowers currently 90 days or more behind on repayments rose 0.08 per centage points in the last 3 months to 0.9 per cent. That is the second highest rate of the four major banks behind ANZ.

Westpac repossessed 550 homes in the last three months, up 68 on the previous quarter.

Westpac said most of the repossessions had occurred in WA and Queensland.

Lending boom of 2016 coming back to bite

The big banks are reporting increasing numbers of borrowers falling behind on their repayments. NAB reported a 0.06 percentage point rise in mortgages 90 days past due to 0.85 per cent. ANZ Bank reported a rise of 0.14 percentage points to 1.14 per cent.

Westpac and ANZ Bank could be particularly vulnerable to rising arrears because of the numbers of loans they sold at the top of the booming property market in 2016.

Westpac was the last of the major banks to rein in sales of interest only loans and non-standard mortgages in 2016. According to mortgage aggregator AFG, Westpac and its subsidiaries accounted for 30 per cent of all investor loans originated in the first half of 2016. That was more than double the market share of the second placed lender, ANZ, in 2016.

Auction clearance rates signal confidence for spring

Auction clearance rates have hit a new two year high, signalling a possible recovery in property markets this spring.

CoreLogic reported that the combined capital city auction market hit a clearance rate of 76.6 per cent on Saturday 17 August. The result could be revised down but is likely to remain the highest rate since 2017.

CoreLogic’s Kevin brogan told Australian Broker that a clearance rate between 60 per cent and 70 per cent is considered “usual.”

“70 per cent benchmark is when we start seeing people attaching significance to the clearance rate in terms of their bidding confidence.”