Interest Rate rises by RBA & Westpac: Mr Swan not happy
The Reserve Bank announced a rise in the cash rate of 25 basis points to 3.75%, effective 2 December 2009, citing that the global economy has resumed growth, and “In Australia, the downturn was relatively mild, and measures of confidence and business conditions suggest that the economy is in a gradual recovery.”.
A day after the Reserve Bank’s announcement, Westpac announced it would increase its standard variable mortgage rate by 0.45 percentage-points. The bank claims that: “The reality is that the cost of Westpac’s wholesale term funding isn’t just governed by the cash rate set by the RBA, and has increased substantially due to the continued pressures of the economic climate.”.
The extraordinary 0.45 percentage-point increase will add $84 to the monthly cost of repaying a $300,000 mortgage, instead of the $48 that would have been imposed had Westpac merely passed on the Reserve Bank's rate increase.
Westpac’s move has enraged the country’s Treasurer, Wayne Swan, who said, ''Westpac and any other bank that follows Westpac's cynical lead have given their customers a slap in the face for Christmas this year. I think Westpac and any other bank that follows Westpac's lead can expect a very severe backlash from their customers and from the community generally.''
The National Australia Bank has since announced an increase to their standard variable rate by 0.25%. Time will tell whether the ANZ, and Commonwealth Bank will follow.
Watch this space!