Australia’s largest credit union CUA has joined the Bank of Queensland in refusing to follow the big four banks in lifting mortgage rates.
The decision opens up a wide gap between its standard variable mortgage rate of 6.72 per cent and the most expensive rate charged by Westpac of 7.46 per cent. The saving from switching a $300,000 mortgage from the standard Westpac rate to the CUA would be $142 per month.
Treasurer Wayne Swan appealed to customers to consider switching saying there were “better deals on offer out there, including a number of deals which are much lower than what’s on offer from the big four”.
The saving may not be as great as the comparison suggests because many Westpac customers were on a discounted rate and may not get such a big discount with another lender.
“Our banking reforms - like banning mortgage exit fees on new loans - are all about putting the power back in the hands of consumers so they can more easily ditch any bank that tries to take them for a ride,” Mr Swan said... “These reforms were opposed by Joe Hockey and the Liberals, who sided with vested interests over Australian families.”
In parliament shadow treasurer Joe Hockey stepped up his attack on the banks referring to almost 2000 jobs to be lost at ANZ, Westpac, Macquarie, Suncorp and other institutions and asking what they said about the industry.
Prime Minister Gillard replied she wanted to make it clear how she felt about the decisions announced by the ANZ. “I think the combination of putting up your interest rates, then announcing job losses, and then seeking to blame both of those decisions on someone else is reprehensible,” she said.
ANZ was the first of the big four banks to increase its rates independently of the Reserve Bank, announcing an increase of 0.06 points Friday. On Monday it announced it would be shedding 1000 jobs.
On Friday it will announce a first quarter profit expected to be steady at $1.45 billion. The Commonwealth Bank will today report a first half year profit expected to be $3.49 billion, up 4.9 per cent. On Thursday Westpac will announce a first quarter profit expected to be $1.55 billion.
The Australian Bankers’ Association acknowledged public concern about the rate rises yesterday saying it understood why people were surprised by the moves.
‘‘For over ten years banks moved in step with the Reserve Bank of Australia and that created the reasonable expectation that the RBA cash rate was the only factor determining bank funding costs and the interest rates banks charged,” said chief executive Steven Munchenberg. ‘‘Unfortunately, the global financial crisis has shown that this is not the case.’’
Reserve Bank assistant governor Guy Debelle told a conference in Sydney bank funding costs jumped sharply in the second half of last year.
In today's Sydney Morning Herald
. Short memories. We kept the banks afloat, and this week they'll...
. ANZ: “The only major bank whose margins shrank in the second half of 2011”
. ANZ leaves the others gaping. But what if they did talk among themselves?