Treasurer attacks interest rate rise
Treasurer Scott Morrison is unimpressed Westpac is about to slug home buyers with its first variable interest rate hike in three years.
Australia’s second biggest bank plans to raise its owner-occupied standard variable mortgage rate by 0.20 percentage points in November.
Morrison has told The Australian Financial Review that while it’s a commercial decision to support a fund raising, the rise was “in excess” of what he had been advised would be sufficient to meet new capital requirements set out by the Australian Prudential Regulation Authority.
Labor finance spokesman Tony Burke said the big banks always seemed to grab the opportunity to lift rates when there was “half an excuse”.
“After the cash rate from the Reserve Bank kept going up … the banks matched it exactly and then when the cash rate was on the way down the banks didn’t match it exactly,” Burke told Sky News on Thursday.
Westpac’s decision to lift variable mortgage rates could set off a domino effect of rate rises by its Big Four bank rivals.
The nation’s second largest bank on Wednesday surprised borrowers with its decision to raise rates on its owner-occupied standard rate by 20 basis points to 5.68 per cent.
Comparison company finder.com.au said mortgage holders should brace for the worst.
“The Big Four set the benchmark across the entire industry, so (the Westpac decision) can trigger the other Big Four banks to lift their rates and then other lenders as well,” spokeswoman Michelle Hutchison told AAP.
“So it’s likely we’ll see other rate rises over the next month.”
Hutchison said Westpac borrowers faced a noticeable increase in their regular repayments.
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“Twenty basis points is considerable and the more you’ve borrowed, the bigger the increase in repayments will be,” she said.
“Borrowers will need to factor that into their budgets before the change takes effect.”
The rise is effective from November 20.
– AAP
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