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Banks Ad Hoc Rate Rises Provides Uncertainty For Consumers

The current environment of Banks increasing rates at their will does nothing for the confidence of consumers.

The days of Banks only taking extra margin when the Reserve Bank (RBA) moved rates is now a distant memory. Those days prior to the Global Financial Crisis (GFC) when the Reserve Bank would increase rates by 0.25% and the banks would raise theirs by 0.38% or the RBA would come down by 0.25% and the banks would only come down by 0.12% seem long gone.

Now the Banks are moving rates whenever they choose. Yes, they are entitled to do this but it does not help the consumer when looking to refinance as the rate that they make their decision on could change in the very near future which could perhaps negate any expected savings.

Something needs to be done to bring back some confidence to the consumer.

During the GFC the government (that really means everyone of us) provided Banks with a guarantee on deposits, surely it is time now for the government to step in and do something for mortgage holders.

Whilst there are a number of things they could do, here is a couple I think would make a big difference to consumer confidence in lending interest rates:

  • Restrict Bank rate movements to when the RBA moves rates for the first 2 years of new loans
  • I don’t think it is unreasonable to ask the Banks to justify their reasoning for increases outside the RBA cycle

There is no doubt in my mind that some of these increases are the Bank’s clawing back the “Bank Tax”.

Do you know what interest rate you are paying on your current mortgage? With all the recent changes there is a good chance you don’t.

We might be able to save you thousands of dollars with a simple call so Contact us here to arrange a confidential discussion about your finances.

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