I came across this article on Australian Property Investor which I'm sure every home owner with a mortgage will agree with!
There's a growing gap between official interest rates and mortgage rates charged by the major banks, according to the Shadow Minister for Housing and Local Government.
Scott Morrison says the gap has "blown out" to more than one percentage point since the global financial crisis started.
"As interest rates fell the major banks failed to keep pace and drop their rates as quickly," he says. "Now interest rates are heading back up, they're ahead of the pack."
“The difference between the movement in the cash rate and mortgage rates for the major banks since the beginning of the global financial crisis is now more than 100 basis points of one per cent.
"This represents an additional $3000 a year on the average $300,000 mortgage."
Morrison says competition for new mortgages is at its lowest level on record, with less than one in 10 new mortgages by value with the non-bank sector.
He says the argument by the banks that the increasing costs of financing makes it necessary to increase rates by more than the Reserve Bank of Australia doesn't wash with the opposition.
"When you take into account all of the other costs involved in the home lending business rather than just the net interest lending margin, the overall profitability of the bank's residential mortgage books has been rising not falling in recent times," he says.
"Commissions are reportedly down 30 per cent and there is much lesser need for big marketing budgets due to reduced competition for new mortgages, now at record lows."
"Home lending has represented a far safer and more profitable bet for banks than the alternatives. Their business banking losses are clearly being supported by their gains in the residential lending sector."
This information was gathered from:
http://www.apimagazine.com.au/api-online/news/2009/12/banks-increasing-rates-by-too-much
Thinking of buying or selling in Nedlands? Call me anytime.
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