ID :
115399
Wed, 04/07/2010 - 09:08
Auther :
Shortlink :
http://m.oananews.org//node/115399
The shortlink copeid
'Big Four' banks raise interest rates
(AAP) - The nation's big banks wasted no time in passing on Tuesday's official interest rate rise in full to borrowers and deposit holders, blaming wholesale funding pressures and the scramble for deposits for their increases.
Commonwealth Bank of Australia (CBA), the nation's biggest lender, was the first out
of the gates for the second consecutive month, setting the path for its rivals by
matching the Reserve Bank of Australia's (RBA) 25 basis point rate rise.
CBA will apply the rate hike to its standard variable rate (SVR) on mortgages and
two deposit products.
Westpac Banking Corporation, ANZ Banking Group (ANZ) and National Australia Bank
(NAB) followed suit, matching the RBA's rate rise and driving the SVR for three
banks to above seven per cent for the first time since December 2008.
All four lenders will apply the rate rises from Friday April 9, they said in
separate statements.
Most other lenders said their rates were under review.
RBA governor Glenn Stevens on Tuesday reiterated his observation in March that
lenders had generally raised interest rates a little more than the cash rate during
previous rate increases.
"With the risk of serious economic contraction in Australia having passed some time
ago, the (RBA) board has been lessening the degree of monetary stimulus that was put
in place when the outlook appeared to be much weaker.
"Lenders have generally raised rates a little more than the cash rate," Mr Stevens
said in a statement accompanying the interest rate decision on Tuesday.
He said interest rates for most borrowers nonetheless had been somewhat lower than
the longer-term average.
Financial comparison website RateCity said home owners were paying higher rates
relative to the RBA cash rate than they had been over the past two years.
The average standard variable rate is now an average 2.54 per cent above the cash
rate - an increase of 0.65 per cent over the past two years, RateCity said on
Tuesday.
RateCity also said the current average SVR is 6.54 per cent.
Mr Stevens in his statement noted that businesses were still paying down debt, or
deleveraging, but the process was moderating.
He said lenders were becoming more willing to lend to business borrowers, resulting
in a moderation in the decline of business credit.
While housing credit has expanded at "a solid pace", recent interest rate rises and
tailing off of the first home owners government grants had crimped new housing loan
approvals, he added.
The Australian Bankers' Association (ABA) attempted to hose down criticism that
banks have cut lending to business, saying that ABA member banks had lent $368
billion to businesses by the end of January 2010, a rise of $52 billion from the
beginning of the global financial crisis.
The banks continue to blame rising wholesale funding costs and a war over retail
deposits for driving up their average funding costs.
As banks continue to roll over their wholesale debt programs, which they say will
become more expensive, the impact will wash through their funds transfer pricing and
into their mortgage and loan products.
ANZ chief executive for Australian operations Phil Chronican said "intense"
competition for deposits combined with the increasing cost of wholesale debt has
placed significant pressure on the bank's lending rates.
NAB said its funding costs would rise in 2010 and it accounts for this in all
interest rate decisions.
The SVR for mortgages offered by the major banks now stands at 7.26 per cent at
Westpac, 7.16 per cent at ANZ, 7.11 per cent at CBA, and 6.99 at NAB.
The Mortgage and Finance Association of Australia (MFAA) says the latest rate rise
should remind people with mortgages to shop around for the best home loan.
"Changes to the official interest rate can present significant opportunities for
consumers who have not already looked into refinancing options," MFAA chief
executive Phil Naylor said.
"We are seeing increasing competition in the lender market, with smaller banks and
credit unions making a strong comeback."
Mr Naylor said there were factors aside from the interest rate that should also be
considered such as levels of service offered by a lender and flexibility of
repayments.
Commonwealth Bank of Australia (CBA), the nation's biggest lender, was the first out
of the gates for the second consecutive month, setting the path for its rivals by
matching the Reserve Bank of Australia's (RBA) 25 basis point rate rise.
CBA will apply the rate hike to its standard variable rate (SVR) on mortgages and
two deposit products.
Westpac Banking Corporation, ANZ Banking Group (ANZ) and National Australia Bank
(NAB) followed suit, matching the RBA's rate rise and driving the SVR for three
banks to above seven per cent for the first time since December 2008.
All four lenders will apply the rate rises from Friday April 9, they said in
separate statements.
Most other lenders said their rates were under review.
RBA governor Glenn Stevens on Tuesday reiterated his observation in March that
lenders had generally raised interest rates a little more than the cash rate during
previous rate increases.
"With the risk of serious economic contraction in Australia having passed some time
ago, the (RBA) board has been lessening the degree of monetary stimulus that was put
in place when the outlook appeared to be much weaker.
"Lenders have generally raised rates a little more than the cash rate," Mr Stevens
said in a statement accompanying the interest rate decision on Tuesday.
He said interest rates for most borrowers nonetheless had been somewhat lower than
the longer-term average.
Financial comparison website RateCity said home owners were paying higher rates
relative to the RBA cash rate than they had been over the past two years.
The average standard variable rate is now an average 2.54 per cent above the cash
rate - an increase of 0.65 per cent over the past two years, RateCity said on
Tuesday.
RateCity also said the current average SVR is 6.54 per cent.
Mr Stevens in his statement noted that businesses were still paying down debt, or
deleveraging, but the process was moderating.
He said lenders were becoming more willing to lend to business borrowers, resulting
in a moderation in the decline of business credit.
While housing credit has expanded at "a solid pace", recent interest rate rises and
tailing off of the first home owners government grants had crimped new housing loan
approvals, he added.
The Australian Bankers' Association (ABA) attempted to hose down criticism that
banks have cut lending to business, saying that ABA member banks had lent $368
billion to businesses by the end of January 2010, a rise of $52 billion from the
beginning of the global financial crisis.
The banks continue to blame rising wholesale funding costs and a war over retail
deposits for driving up their average funding costs.
As banks continue to roll over their wholesale debt programs, which they say will
become more expensive, the impact will wash through their funds transfer pricing and
into their mortgage and loan products.
ANZ chief executive for Australian operations Phil Chronican said "intense"
competition for deposits combined with the increasing cost of wholesale debt has
placed significant pressure on the bank's lending rates.
NAB said its funding costs would rise in 2010 and it accounts for this in all
interest rate decisions.
The SVR for mortgages offered by the major banks now stands at 7.26 per cent at
Westpac, 7.16 per cent at ANZ, 7.11 per cent at CBA, and 6.99 at NAB.
The Mortgage and Finance Association of Australia (MFAA) says the latest rate rise
should remind people with mortgages to shop around for the best home loan.
"Changes to the official interest rate can present significant opportunities for
consumers who have not already looked into refinancing options," MFAA chief
executive Phil Naylor said.
"We are seeing increasing competition in the lender market, with smaller banks and
credit unions making a strong comeback."
Mr Naylor said there were factors aside from the interest rate that should also be
considered such as levels of service offered by a lender and flexibility of
repayments.
