Friday, February 10, 2012

ANZ: “The only major bank whose margins shrank in the second half of 2011”

The ANZ has quietly lifted the mortgage rate it charges new customers.

Bank executives will meet this morning to consider formally lifting the rates charged to all variable mortgage customers. An increase of 0.10 percentage points would add $19 to the monthly cost of servicing a $300,000 loan.

But on Monday with minimal fanfare ahead of Tuesday’s Reserve Bank board meeting the bank lifted the effective rate charged to new high-value mortgage customers.

Previously new customers borrowing at least $500,000 were were offered a discount of 100 points off the standard variable mortgage rate, taking the rate charged from 7.3 to 6.3 per cent.

On Monday the discount was cut to 90 points, lifting the rate charged to new customers to 6.4 per cent.

“It means anyone who has applied for a $500,000 loan from Monday will be paying $31 more per month than anyone who borrowed the week before,” said Canstar senior financial analyst Mitchell Watson.

“Existing customers are still paying the same rates so it doesn’t make the ANZ that much money, but it is a sign it is tightening.”

The move comes as the Swiss-based Financial Stability Board expressed concern about Australia’s relatively generous government backing of bank deposits...

Australia has one of the broadest depositor protection schemes in the world. With a cap of $250,000 the scheme is equal to only the United States in terms of protected deposits.

‘‘Although a high coverage level reduces the incentives for depositors to run, adequate controls are needed to ensure a proper balance between financial stability and market discipline,’’ the Financial Stability Board said in a global review.

The ANZ pledged in December to no longer closely follow the Reserve Bank in adjusting rates, considering the question independently on the second Friday of each month.

Evans & Partners banking analyst George Gabriel said of all the big banks the ANZ was under the most pressure to tighten rates.

“It's the only major bank whose margins shrank in the second half of 2011,” he told the Herald.

“Westpac and Bendigo Bank are talking about following the ANZ, but it is the ANZ that needs to move rates the most.”

Mr Gabriel said on balance he thought the ANZ would not move today because it would not want to “expend all its political capital unnecessarily”.

“The spectre of re-regulation always hangs over banks. France has just introduced 0.1 per cent financial transactions tax. It’s not wise to antagonise the Treasurer without a good reason.”

The National Australia Bank promised this week that its rates would always be lower than the other big three for the duration of the year. Bank of Queensland said yesterday it would hold its rates steady until the next Reserve Bank board meeting regardless of what the other banks did.

“It’s great to see Bank of Queensland really throwing down the gauntlet to the big banks to do the right thing by their customers,” Treasurer Wayne Swan said. “Our reforms 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.”

Consumer group Choice called on the big four banks to back up their decisions about home loan rates with evidence, publishing the reasons for any changes.

“If it’s good enough for the Reserve Bank to release the minutes of its board meetings, it’s good enough for banks who seek to go it alone,” campaign director Chris Zinn said.

In today's Canberra Times, Sydney Morning Herald and Age

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