Home Loans News: 03 Mar 2010
MORTGAGE holders can breathe a guarded sigh of relief after the first official rate rise of the year...
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Each of the lenders that has responded has passed on no more than the Reserve Bank's 0.25 percentage point increase.
But each has also complained about ''cost pressures'' and hinted it would not be able to continue to hold the line.
Calculated on the average interest rate of the four major banks before yesterday's increase.
After imposing an outsized increase of 0.37 of a percentage point increase when the Reserve last lifted rates in December, the Commonwealth Bank this time kept its increase to 0.25 of a percentage point but warned it ''continues to experience increases in wholesale funding costs''.
The ANZ, which pushed up rates 0.35 points last time , fell in line with the Reserve Bank but warned it was ''continuing to absorb additional funding costs'' to balance ''very real commercial pressures with the interests of our customers and the broader community's interest in the economic recovery''.
St George, owned by Westpac which in December led the pack with a 0.45 point increase, said it would only push up rates 0.25 points to take ''a responsible approach to managing interest rates and funding cost pressures''.
Even the National Australia Bank, which was the only one last time to hold its increase to 0.25 points, said this time it would need to examine the ''cost of providing funds'' before deciding.
Within minutes of the Reserve's announcement, the Treasurer, Wayne Swan, sent a message to the banks that there was ''absolutely no justification whatsoever for any increase over and above the official cash rate increase''.
''If we look at the net interest margins for the major banks, they have improved to pre-crisis levels,'' he told a Parliament House press conference. ''I have made my views very clear about what Westpac did last time - it was not justified and they thoroughly deserved the backlash they subsequently suffered.''
The latest increases make ANZ the most expensive bank with a standard variable mortgage rate of 6.91 per cent, and NAB the cheapest with a rate of just 6.74 per cent if it does no more than pass on the official increase. If Westpac passes on the increase in full, it will lead the pack with a standard variable rate of 7.01 per cent, and be the first bank to push its mortgage rate above 7 per cent.
Mr Swan said rates were still at ''1970s lows''. ''I think families and businesses understand that rates can't stay at emergency levels forever, although for someone with a mortgage, it's tough stumping up an extra $50 a month.''
The governor of the Reserve Bank, Glenn Stevens, described the rise as ''a further step'' in the process of returning rates to average levels now that economic growth was likely ''close to trend''.
He has previously stated he expects two to four such rises this year.
The increase will add about $47 to the monthly cost of servicing a $300,000 mortgage, and $63 to a $400,000 mortgage.
Meanwhile, the Bureau of Agricultural and Resource Economics has forecast a 15 per cent increase in mineral and agricultural commodity exports, reaping $186.8 billion in 2010-11.
The drive in commodities exports comes on the back of surging demand from China and India for iron ore and coal.
SOURCE: Peter Martin - Sydney Morning Herald
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