Fat cat bankers unable to promise there won’t be more rate rises
AUSSIE homeowners have been slugged at least $400 more a year with fat cat bankers unable to promise there won’t be further mortgage interest rate hikes to come. Here’s how.
NSW
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AUSSIE homeowners have been slugged at least $400 more a year with fat cat bankers unable to promise there won’t be further mortgage interest rate hikes to come.
The Commonwealth Bank and ANZ have followed Westpac’s lead by increasing rates just two days after the Reserve Bank kept the official cash rate on a record low of 1.5 per cent.
“It means people on variable rate mortgages will have dip into their savings or spend less,” said independent economist Saul Eslake.
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ANZ will hike rates by 16 basis points from September 27, hurting 850,000 customers and adding $476 a year to the cost of a $400,000 mortgage.
Meanwhile Commonwealth Bank will punish 1.2 million customers with a 15 basis point rise that will add $447 a year to the average mortgage.
And economists warn that if interest rates keep rising in America the banks in Australia will continue to hike rates at home — threatening $1000 a year increases.
ANZ group executive Fred Ohlsson — who trousered $2.62 million last year — explained rising wholesale funding costs had resulted in the “tough decision” to hike rates.
“We have taken the decision to change our variable mortgage rates, that is always a tough decision, we always consider our stakeholders, customers, shareholders and the community,” he said.
But he warned if the costs of borrowing money overseas “continue to elevate” then it would mean “another rate increase”.
Treasurer Josh Frydenberg said: “It’s up to the banks to explain to the Australian people why they lifted rates.
“Any financial institutional which makes these decisions needs to explain to its customers why.”
But Capital Economics chief economist Paul Dales said: “Banks are there to make a profit, not to help us out.”
He predicted slow wage growth coupled with high prices for electricity and petrol meant households “are going to have to start paring back a bit.”
“People are going to be spending more on things they have to pay for, like mortgages, and less on things they want to like shopping or restaurants,” he said.
Acting shadow treasurer Jim Chalmers said: “Australians have yet another reason to be angry and frustrated with the big banks after more have announced out-of-cycle rate hikes.
“Middle Australia is already struggling to make ends meet, and customers of the big banks will be considering other options.”
Last month the Commonwealth Bank recorded a whopping $9.37 billion profit and stuffed $2.9 million into CEO Matt Comyn’s bulging pay packet.
Despite the bonanza CBA’s head of retail banking Angus Sullivan — who was paid about $270,000 this year — said “careful consideration” meant “underlying costs” needed to be passed on to long-suffering mortgage payers.
“The banks are certainly attaching far greater importance to pleasing their shareholders than pleasing their customers,” said Mr Eslake.
Westpac made the first move to hit customers with a rate rise last week — despite a $7.99 billion profit last year that allowed CEO Brian Hartzer to take home $6.7 million.
RateCity research director Sally Tindall said yesterday’s interest rate hikes clearly show that when one big bank pulls the trigger, the others follow.
“CBA and ANZ’s decision to hike rates hot on the heels of Westpac was a predicable step in what is becoming a well-worn routine,” she said.
“In fact, hiking on the same day means they can shoulder the backlash together.”
Ms Tindall called on NAB to break free from the tradition and find a way to keep its variable rates low.
“While Australia’s big banks might move like a flock of sheep it doesn’t mean their customers have to,” she said.
“If you live in your own home and own at least 20 per cent of it, start shopping around — you’ll be surprised at what rates are on offer.”