Banks under pressure on rates

THE treasurer is urging banks to be mindful of increased cost pressures on families when considering lifting home loan interest rates

Banks under pressure on rates

TREASURER Wayne Swan is urging local banks to be mindful of increased cost pressures on families when considering lifting home loan rates because of international financial pressures.

The National Australia Bank - the country's second-biggest housing lender - has responded to global credit market turmoil by lifting it variable home loan rate by 12 basis points to 8.69 per cent.
Other banks are expected to follow during the next week.

"This rate rise announced by the NAB is a direct consequence of the sub-prime mortgage crisis in the United States,'' Mr Swan told ABC radio today.

"But I would still urge all of the banks to be very mindful of the significant financial pressures on families when making decisions in these matters.

"The turbulent international conditions when it comes to financial markets are now posing very significant challenges to our economy and this is one example of that.

"I would urge them to be very mindful of the financial pressures on Australian families when they are passing on increased costs that flow from the sub-prime crisis internationally.''

Mr Swan said Labor had campaigned hard on cost-of-living pressures in last year's election race and said the new government was acting on those pressures.

"For example, we have now authorised the ACCC (Australian Competition and Consumer Commission) to investigate price rises at the petrol bowser and to take action,'' he said.

"Many people would be scratching their heads, looking at the (interest) rise almost simultaneously with the rise on international markets.

"When it comes to interest rates, the parting gift of the Liberal party to the people of Australia was to pass on an elevated level of inflation which is putting upward pressure on interest rates.

"We've indicated that our most significant priority when it comes to the economy is putting downward pressure on inflation.''