Cba Sets Pace On Home Rates Rise

The Age

Tuesday March 11, 2008

By Nassim Khadem, Economics Correspondent, Canberra

THE nation's biggest home lender, the Commonwealth Bank, has a new claim to fame - the highest interest rates.

A week after the Reserve Bank lifted official rates, the Commonwealth tomorrow will put up its standard variable home rate by 35 points - 10 points more than the central bank rise of 25 points.

At 9.32%, the Commonwealth's new home rate is higher than any of its main competitors. But it may not hold this title for long: the ANZ is expected to impose a similar rise soon, and St George Bank could go even higher, signalling that it is considering a rise of 40 basis points.

Federal Treasurer Wayne Swan warned that banks ran the risk of losing customers. "We fully understand the impact of rate rises on Australian families and have acted decisively with our bank-switching package to help customers vote with their feet if they think their bank is acting unreasonably," he said.

Last week Westpac hit customers with a 30-point rise, taking its standard variable mortgage rate to 9.27%. National Australia Bank announced a rise of 29 basis points, from 8.98% to 9.27%.

The Commonwealth's head of retail banking, Ross McEwan, said the increase had maintained "a balance between the needs of shareholders and customers", with the bank continuing to absorb "a significant portion" of the additional costs incurred since the global credit crunch.

While the Commonwealth is keen to raise its lending rate by 35 basis points, it would not give the same deal to customers with deposit accounts. The deposit interest rate on the NetBank Saver and Business Online Saver accounts will rise by the same level as the official cash rate, 25 basis points.

Meanwhile, Liberal frontbencher Joe Hockey has played down speculation on his future, and warned of recession.

The Liberal Party is reportedly considering drafting him into a NSW state seat, but ABC online quoted him saying: "I'm not that focused on myself as I am on others at the moment. I firmly believe that we are heading into recession nationally."

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