Westpac sticks neck out on rate rise
By
Andrea Lavigne
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3/12/2009 8:57:00 AM
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Westpac remains the first and only bank to raise rates after the Reserve Bank of Australia announced its decision to hike the official cash rate up by 25bps, but analysts are speculating the other major banks are just letting it take the heat before they do the same.
WBC wasted no time on Tuesday, following the RBA's decision to move rates by announcing its own decision to push up standard variable mortgage rates by 45bps starting Friday (4 December).
The bank's movement outside the official rate rise attracted the anger of Treasurer Wayne Swan, who predicted there would be wide community backlash against Westpac from its customers and the community generally.
Westpac blamed the "regrettable" rate rise on continuing cost pressures it is experiencing in wholesale funding markets, as well as the higher rates it is paying on customer deposits.
The other banks have yet to respond with similar measures, however, economists say they are facing the same funding pressures as Westpac and will likely move rates outside the RBA's .25% increase.
MFAA CEO Phil Naylor told the AFR that most new home owners could handle the rate rise, as lenders factored in the rate rises when deciding whether to grant the loan in the first place.
A Westpac spokesperson also stated 57% of its borrowers took advantage of the lower rates over the last year to get ahead in their mortgages.
The RBA does not meet again until February, but economists are predicting the central bank will put further rate rises on hold until March.
Related stories:
Westpac bumps up rates by 45bps - Westpac has blamed wholesale funding costs for its "regrettable" decision to push up its standard variable mortgage rate by 45bps from Friday (4 December).
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BBB on
04 Dec 2009 11:55 AM
Is the price of market share too high , the argument that cost of funds is too dear is a little surprising , given that the like of Bendigo * Members equity have had successful issues in the last few weeks. plus the Federal goverment releasing anothet 8 billion for RMBS issues .
It is called profit taking , we as brokers should be really cautious about using Westpac at present .