Banks Take Rates Higher Still
Sydney Morning Herald
Saturday March 8, 2008
MONTHLY mortgage repayments are continuing to climb above the Reserve Bank's latest interest rate increase. Westpac yesterday lifted its home loan rate by 0.3 of a percentage point to 9.27 per cent.
Westpac joined National Australia Bank by passing on to home buyers the extra costs that the banks are having to pay to borrow from international markets. ANZ, Commonwealth and St George are expected to follow suit in the next couple of days.ANZ's chief executive, Michael Smith, said yesterday that the increasing costs of funding may result in credit rationing to home and business borrowers.St George has said that home loans would have to go up by 0.4 percentage points if it was to cover the cost it was continuing to bear.Yesterday's increase will add about $60 a month to repayments on a mortgage of $300,000. If the banks had stayed in line with the RBA, the amount would have been $50.Westpac said it was "extremely mindful" of the effect on its borrowers but that it was continuing to absorb a large proportion of the additional costs. Jeremy Dean, acting head of the bank's retail banking business, said that home loans could rise even further without prompting by the RBA if the global pressures failed to abate.The Big Squeeze - Page 45
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