A leading industry organisation has called on the majors to follow the lead set by smaller banks and start cutting interest rates.
The Finance Brokers Association of Australia (FBAA) says it’s time for the majors “to stop talking up the credit squeeze” and start actually “helping borrowers.”
“In the ongoing debate about the reforms impacting mortgage brokers there has never been a more crucial time for competition in the marketplace,” said MD of the FBAA, Peter White.
Looking ahead to potential rate cuts that may come further in 2019, White believes that major banks will again position themselves to protect their interests above customer outcomes.
He explained, “Smaller banks are already cutting rates and some economists are predicting two official rate cuts this year with the Reserve Bank moving to a neutral bias amid concerns about the slowing global economy and the declining housing market.
“But going by history, I suspect the [major] banks will protect their massive profit margins by refusing to pass on any cuts in full.”
White also expressed his frustration that big banks are refusing to take responsibility for their actions.
In months past, they cited increasing funding costs as the reason for rate hikes. Now, they’re attempting to pin the rising rates and delays in assessing loan applications on the royal commission.
White agreed with ASIC chairman James Shipton’s sentiment that the major banks can’t reasonably blame the responsible lending regulations for causing the credit squeeze as they’ve been doing, “when the laws have been in place for more than a decade.”