The executive director of industry association Finance Brokers Association of Australia (FBAA) has hit out at the majors, questioning why borrowers should pay for the banks’ mistakes.
The retaliation comes after Westpac was the first of the big four banks to make an out of cycle rate increase, following weeks of smaller lenders making changes.
The major announced on Wednesday that all variable mortgage rates will increase by 14 basis points for new and existing customers.
Peter White from the FBAA has called the situation “disgraceful”. It is expected the other majors will follow suit very soon, despite government officials and new Prime Minister Scott Morrison criticising the move.
White said, “This is just the beginning of the interest rate rises. This time it was Westpac taking the fall, delivering the bad news, now the other major banks will follow suit because Westpac has already taken the media hit.
“Yes, the royal commission has shown the banks need to tighten things up but why should borrowers have to pay for their stuff-ups?
“My message to the big banks is, how many billions is enough, or is there no limit to this era of self-satisfying greed? All under the guise of looking after shareholders.
“What happens when the annual profit is $20billion? Is that enough? Or where does it end? Where is the fairness for the consumer?
“A lot of the regulatory tightening that is needed now is because the banks have messed up so why do we have to pay? Banks caused this problem so they should fix it at their cost.
“This situation is disgraceful and APRA has proven itself again to be a toothless tiger.
“The FBAA has been predicting for some time now these rises are coming and the best way to prepare for your future is through a broker as they have your interests at heart.”
In a statement announcing the rise in interest rates, Westpac blamed the rising costs of wholesale funding.
George Frazis, chief executive, consumer bank at Westpac, called it a “tough decision”. He said the bank had been absorbing additional costs for six months thinking it to be a temporary situation, but that the time had come to increase rates.