Greedy Westpac spoils Christmas

OUTRAGED home buyers branded Westpac "disgusting" after the bank almost doubled the RBA's rate rise.

Chris and Catherine Sutton with their children Charlie, 5, and Lily, 8, at their home in Orange, NSW. Picture: Nathan Edwards

OUTRAGED home buyers branded Westpac the Christmas scrooge after the bank almost doubled yesterday's official interest rate rise.

Hours after the Reserve Bank upped the official rate by 0.25 percentage points, Westpac slapped home buyers with a 0.45 rise.

Westpac's standard variable rate is now 6.76 per cent, adding $85 a month to repayments on a $300,000 loan.

Schoolteacher Catherine Sutton summed up the feeling of many mortgage holders when she heard the news of Westpac's rate hike: "It's disgusting, isn't it?"

The 36-year-old said that the bank's rate rise had killed her family's hopes of having an extra bedroom added to their home.

"We have had to hold back on the renovations," Mrs Sutton said.

"We count our pennies now, pay the mortgage and make sure the kids are fed."

Her husband, Chris, said that Christmas for their children, Lily, 8, and Charlie, 5, would have to be more frugal due to the rate hike.

"It limits us in terms of what we can do on holidays," Mr Sutton, 37, said.

Mr Sutton said he and his wife would like to change lenders for their Orange, NSW, home but felt the switching fees were too high.

"They've got you over a barrel," Mr Sutton said.

Late yesterday, Treasurer Wayne Swan expressed his outrage at Westpac's move.

"Westpac and any other bank that follows Westpac's cynical lead have given their customers a slap in the face for Christmas this year," he said.

Mr Swan accused the bank of trying to bury the rise by announcing it while attention was focused on the Liberal Party's leadership struggle.

"As I have said clearly, I see no justification at all for this move by Westpac cynically trying to use the cover of today's other events," he said.

The bank could expect "a very severe backlash from their customers and from the community generally".

Westpac, which made a $3.4 billion profit this year, blamed surging borrowing costs for its decision. Spokesman David Lording said the costs were 81 per cent higher than a year ago.

"We have tried to absorb those costs for as long as possible," he said.

"We understand the impact on our customers and we regret that."

The Australian National Retailers Association chief executive Margy Osmond warned the latest round of rate rises could throw a wet towel over Christmas spending.

"This runs the risk of choking off what might have been a good Christmas," she said.

Housing Industry Association economist Harley Dale said the rise would hurt home building during a time "chronic housing shortage".

- With The Daily Telegraph