The chief executive of the FBAA has said that interest rates need to rise to maintain a “better balance”.
Speaking to Australian Broker
about Westpac’s decision to raise their residential mortgage rates by 20 basis points, the CEO of the FBAA Peter White
says whilst he is in favour of lower rates, there is a reality to consider.
“I understand why brokers would be questioning [the rate rise] but there needs to be a balance. The simple reality is when the GFC hit, interest rates and margins were larger… even though we survived it, margins got pushed out and interest rates got increased. Remember what happened when we hit the GFC, rates went through the roof.
“So yes, we survived [the GFC] but we survived it by pushing our margins and increasing interest rates. What is trying to be done here is to stop that kind of thing happening again. The concern that sits in the next few years is whether we will hit another property bubble and will that be an impact on borrowings?”
White also says the rate hikes shouldn’t come as an untoward surprise for brokers – banks are a business.
“The capital adequacy requirements were always going to be pushed back [onto the borrower] and I have been editorialised on this in the past. There is no way the banks were ever going to absorb it," he told Australian Broker
“Regardless of how much we kick and scream, this is what is going to happen… There will be a huge uproar against it and I am not saying I am in favour of it but from a reality check, it was always coming.”