Banks to raise mortgage rates beyond RBA rates
The big four banks have indicated they will increase mortgage rates beyond the Reserve Bank’s rates in the coming months, The Sunday Telegraph reports.
According to the reports, the big four claim they will be forced to lift interest rates beyond the official RBA cash rate increases because they are facing higher costs of raising money in the wholesale markets.
The Commonwealth Bank, National Australia Bank, Westpac and ANZ last week matched lifts in their lending rates to the Reserve Bank’s 0.25 percent hike to its cash rate, the first increase in 19 months off a 49-year low.
According to a NAB spokesperson, even if the cash rate remained unchanged, it would still be under pressure to increase its mortgage rates.
“The average costs of our funds is rising, and our forecasts suggest it will continue to rise well into 2010. We will need to take all these factors into consideration when setting rates in future.”
Commonwealth Bank CEO Ralph Norris also refused to rule out topping up the RBA increases with hikes of its own.
Going forward we will, as always, look at our overall funding costs to determine our interest rates,” he said.
However the news has angered Treasurer Wayne Swan.
“The government would be quite angry if they (the big four) moved outside the official Reserve Bank rise,” he said.
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I believe the banks should be able to assess their own cost of funds. If the public were educated enough to understand that they don’t just borrow from the RBA then there wouldn’t be the media hype & hysterics
I believe anyone who can change the terms of a contract at will should be considered acting unconscionably if they rely on a term in the contract to charge someone an exit fee/penatly when they do. So if they have a formula other than the RBA rate change it should be defined in the contract. This also extends to other fees changed over the life of the contract [like the exit fees].
If my mobile phone contract allowed my provider to change my $49 a month plan to a $79 month plan at will and still charge me any early cancellation fee then consumer affairs would intervene. If Wayne Swan wants to show a little guts he should say no guarrantees to banks that don’t allow a free exit.
Am I missing something here, the government used our taxes to support the banks and they in turn are stepping outside the RBA\’s bounds. They didn\’t pass on all of the fall and now they want to pass on a higher increase.
Isn\’t this called biting the hand that feeds you?
I understand that the banks need to make a profit but if we the taxpayers are securing their corporate future in home lending then we should be able to hold them accountable to the RBA\’s rates.
Wouldn\’t it be nice if our politicians all had mortgages so they could feel the pain and do something about it