Time for banks to hand back windfall from out-of-cycle increases


Average borrower down $400+ due to hefty home loan hikes

CHOICE says whatever the RBA decides on interest rates on Tuesday, it’s now time for the big four banks to start returning to households the extra interest they've paid because of out-of-cycle hikes on mortgage rates.

The consumer group says the banks should not only pass on in full any possible cut to the cash rate, they should go further by making good for a full year of excessive increases to mortgage rates.

The average home loan is now $288,300 and with this amount of debt on a standard variable rate households have each paid an estimated $432 in extra interest.

“Instead of any hesitation from the banks to immediately pass on in full any possible cut to the RBA’s cash rate they need to go further and return to the state of play that existed before last year’s unjustifiable increases,” says CHOICE head of campaigns, Christopher Zinn.

On Melbourne Cup Day last year, the CBA raised its rates by almost double the official increase of 0.25% with the other major banks soon following suit.

On average, the big four raised rates by 15 basis points more than the RBA, blaming the cost of overseas funding.

However, CHOICE says the big four banks have increased their deposits from households by more than $20 billion in the last year, providing an important additional source of funding.

The margin between the banks’ standard variable rate and the RBA cash rate has increased in the banks’ favour from 2.6% in Dec 2009 to 3.05% in November 2010 where it currently remains. 

Read more on CHOICE’s Better Banking Campaign

Media contacts:
• Christopher Zinn, director of campaigns - 0425 296 442
• Matt Levey – head of campaigns – 0488 214 066

Related articles

Related tags:
 
 

CHOICE releases Better Banking report

CHOICE heads to Canberra to deliver its report to Swan and Senate.

2 Mar 2011 | The report marks a major milestone in our campaign for fairer banking.

Bank satisfaction survey 2010

The Big Four again rank bottom for customer satisfaction, but we found they are quite open to giving discounted rates - when asked.

1 Sep 2010 | If you're not getting an interest rate saving of at least 0.7% then you're probably paying too much.

 

Better Banking Campaign

Send a message the ‘big four’ banks can’t ignore.

6 May 2011 | Following the latest stand-off in passing on RBA interest rate cuts, it's no surprise the ‘big four’ banks are well and truly on the nose with consumers.

Better banking within reach says CHOICE

3 Mar 2011 | A new CHOICE report sets out the practical steps banks can take within the next 12 months to herald a new consumer friendly age of banking.

 
 

Sign up to our free
e-Newsletter

Receive FREE email updates of our latest tests, consumer news and CHOICE marketing promotions.