Despite cash rate cuts by the Reserve Bank totalling more than three percent in the past six months, the interest rates on some business overdrafts are higher than they were this time last year. A number of standard variable loans for businesses have barely moved.
While householders have seen a significant drop in mortgage rates due to government and media attention businesses, especially small businesses, have had to contend with continually high interest rates, as high as 10.04 percent on some products.
Australian Bankers Association (ABA) chief executive David Bell defended the business rates in saying that business loans were generally more risky than mortgages. “It is true that banks’ business customers have not seen the same level of pass-through on interest rates as provided to home borrowers. The reason for this is that banks have to prudently manage risk in their loan books and, generally speaking, some business loans are risky,” he said.