Beating banks with a feather
LENDERS are expected to be told not to rig 'de facto' home loan rate rises, when they appear before a parliamentary committee today.
Beating banks with a feather
THE Federal Government today will demand banks match official interest rate cuts or face an unprecedented backlash.
But Treasurer Wayne Swan made it clear there was nothing new to back up the tough talk, and that it was the job of borrowers to do the heavy work.
Lenders, including mortgage specialists, will be ordered not to rig "de facto'' interest rate rises by not passing on cuts in official rates made by the Reserve Bank.
ANZ and Bankwest will be the first institutions to get the lecture when their executives appear before the House of Representatives standing committee on economics inquiry into competition in the banking and non-banking sectors.
The Melbourne hearing will call on the banks to commit to following future Reserve Bank cuts.
Committee member David Bradbury, Labor MP for Lindsay, told The Daily Telegraph all lenders were being put on notice.
"If any cuts are made by the Reserve Bank, and banks stand between struggling homeowners and the interest rate relief that cut is designed to provide, then there will be a backlash of unprecedented proportion,'' Mr Bradbury said.
However, nobody can explain what that backlash might be -- and Mr Swan yesterday made it clear the Government had no new measures to force rate action by banks.
In his regular blog for The Daily Telegraph, Mr Swan said family budgets had been hit hard by unofficial bank rate jumps in addition to the eight official interest rate rises by the Reserve Bank in the past three years.
He then said it would be up to customers to keep the banks in line, not the Government.
"In relation to unofficial rate rises by the banks: We don't regulate the banks in that way in Australia these days,'' he said.
"What we can do is put as much competitive pressure on the banks as possible -- which is exactly what we did with our bank-switching package which I launched earlier this year.
"The effect of that package is that it will allow families to vote with their feet much more easily if they feel they're not getting a good deal.''
No bank has yet committed to reducing rates in line with the Reserve Bank, while the Commonwealth Bank and National Australia Bank have already hinted they may not.
With the Reserve Bank now leaning towards a cut, there are growing fears banks already increasing rates beyond the Reserve Bank's mark will continue to gouge struggling homeowners by keeping their rates inflated -- or worse -- raising them.
Commonwealth Bank boss Ralph Norris hinted in July his bank may not cut rates in line with the Reserve Bank and may continue to make "out of sequence'' increases.
NAB's boss of retail banking Andrew Thorburn said mortgage rates had "permanently decoupled'' from the Reserve's cash rate -- allowing banks to raise and lower rates as they see fit.