Big four could encounter price signalling accusations following potential rate cut

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Australia’s major banks may be about to break their two-year habit of not passing on full RBA interest rate cuts – so long as they avoid ACCC directed accusations of price-signalling.

The big four are said to have already conducted boardroom-level discussions about cutting rates independently.

 Westpac, for example, is reportedly considering a rate cut by up to six basis points next month, irrespective of the RBA’s cash rate decision following its February 5 meeting. 

According to a Peach Home Loans spokesperson, if the rate cut happens, borrowers with an average $320,000 home loan could save $160 in a year – something which would suggest better competition in the mortgage sector.

However, Peach says there’s some concern surrounding the possibility of price-signalling accusations being made to ACCC as major banks “keep mum” regarding the possible interest rate changes.

But an ACCC spokesman says the likelihood of any such complaint being successful is slim.

“It has to be a private disclosure, which would be a per say breach. Publically stating it wouldn’t be a concern.”

The spokesman says that, while ACCC has can’t control who does or doesn’t complain, he doesn’t believe the major banks have acted inappropriately at this stage.

Analyst TS Lim of Bell-Potter Securities told news.com.au that he’s expecting one of the big four banks to cut rates by March.

“They won’t be aggressive when they cut outside the RBA’s movements, but I think at least one of them will cut in February or March, which will really force the others to act in response.”

Stephen Walters, an analyst at JP Morgan, says that the easing of global funding costs would enable banks to make out-of-cycle cuts to mortgage rates, even if the RBA wouldn’t in the coming months.

“This would ease financial conditions without the RBA having to adjust policy.”

 

 

 

  • John Whitten on 8/01/2013 11:46:07 AM

    If their margins have improved so much that they can offer the reduction in rates stated, now is the time for the banks to at least reinstate broker commission to what they were before GFC.

    The banks stated that their contracting margins were the reason for reduction in broker commission, so now that the margins have improved, it is time to reinstate our commissions to previous level.

    The banks are all quick to state that they support the broker channel, now we will see which banks are prepared to walk the walk not just talk the talk.

  • BONED on 8/01/2013 10:11:26 AM

    At 6 basis points, they're still 5 basis points behind ANZ & CBA, & 7 behind NAB! Why would you even consider Westpac in the first instance?

  • John Smith on 8/01/2013 9:56:22 AM

    Its a shame the banks get away with price fixing & everyone else goes to court to explain themselves.!!!

    Uniformity does not exist in this country we call Australia. One rule for them & another for us..!!!

    I also agree with the CA Broker Comment-:
    "$160 a year ?? Not exactly huge motivational numbers. Try $160 a month".

  • Allan Faint on 8/01/2013 9:17:23 AM

    I am sorry but I cant believe the banks are not always in discussion with each other about how much profit they want to be making, over the past few years.
    maybe they want to make themselves look a little better, improve their market share a little, before keeping a bit more next time. as their margine over the RBA has increased by over 1.5% since the GFC, they have plenty of our money to play with.

  • CA broker on 8/01/2013 9:15:19 AM

    $160 a year ?? Not exactly huge motivational numbers. Try $160 a month.

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