Banks need to justify their decisions to increase interest rates, says the Finance Brokers Association of Australia (FBAA).
Executive director Peter White says interest rate movement has seen some investor and interest only loans increase by as much as 66 basis points, some since the federal budget was handed down in May, but there has been little explanation as to why.
“And it’s not just the big four that have done this,” said Mr White. “Most banks are doing it, but they haven’t justified their reasons for going this route.
“Are they passing on the bank levy to consumers before it comes into play on July 1, trying to slow the market, or destroy small business borrowers by restricting interest only borrowings?
“We also don’t know whether the Australian Competition and Consumer Commission (ACCC) has determined that these increases are okay.”
Mr White said banks can be compelled to account to the ACCC on rate movements, so the questions are what is the ACCC doing about these movements and what is the government saying to lenders?
“While banks may claim these movements have nothing to do with the bank levy, they are leaving themselves open to criticism as it appears this isn’t the case.
“Where’s their compliance? Or is the issue that the ACCC is a toothless tiger?
“Some of the movements are quite extraordinary and the market needs to know what’s going on.”
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