'greedy' Banks Anger Mp

THROSBY MP Jennie George has labelled Australia's major banks as "greedy" following the National Australia Bank's decision to increase its variable home loan rate by 0.12 per cent.

The NAB's rate increase will add $4.60 per week to repayments on a $200,000 home loan. The move breaks an unwritten rule between the Reserve Bank and major lenders.

It's the first time in more than 10 years a bank has increased its variable rates without a change in official rates by the Reserve Bank.

Other major banks are expected to follow the NAB's move before the Reserve Bank next meets on February 5.

Ms George said the NAB's decision was not a reflection of the banking sector's view of the new Labor Government.

"It is more a reflection of the greed driving the banks rather than anything to with the political process," she said.

In her view, the NAB's move to act before the Reserve Bank "sets a bad precedent" and the banks were using the collapse of the United States sub-prime mortgage crisis as an excuse, especially as they continued to deliver record profits.

Member for Gilmore Joanna Gash said she would be interested to see how her fellow Illawarra MPs Sharon Bird and Ms George handled the issue of interest rates now they were in government.

"Labor always said a rate rise didn't have to happen so it will be interesting to see the solutions they come up with," Mrs Gash said.

Ms George said the Government will do what it can to put downward pressure on inflation, adding the Howard government ignored many warning signs when it came to inflationary pressures.

Ms Bird, the member for Cunningham, said it was not the Government's intention to intervene in the banking sector, nor was there a short-term solution to the problem.