Editorial Banks Must Toe The Line On Rates Cut

Illawarra Mercury

Tuesday September 2, 2008

TODAY is D-Day for the Reserve Bank and the country's big five banks to do the right thing by home buyers and drop interest rates.

Financial markets are expecting a cut in the cash rate to 7.0 per cent from 7.25 per cent - the first reduction since December 2001.

Wizard Home Loans has already paved the way, and it is only fitting that the banks - with 80 per cent of the $700 million bank home loan market - follow suit.

According to the Australian Prudential Regulatory Authority, Westpac, the Commonwealth Bank and St George hold nearly 50 per cent of all bank home loans.

Consumer group Choice estimates it will cost home buyers $2 million for each day the banks fail to pass on a rate cut.

These are the same banks who immediately pass on any rate increase and who have even raised rates outside Reserve Bank announcements.

Unfortunately, even though many customers are dissatisfied with their present bank and may want to refinance with non-bank lenders, most find it too difficult and costly to switch accounts.

It's time the Federal Government looked further into banking practices and protected the little Aussie battler rather than the big Aussie bankers.

Maybe then the big boys will realise the value of looking after their customers.