Thousands of home owners are facing higher interest rates as the big banks move to protect themselves from rising debt and the high cost of borrowing.
The ANZ and the NAB have both been hit by the recession, with NAB on Tuesday announcing a 0.9 percent drop in net profit, to $2.66 billion, and the ANZ revealing yesterday that its first half-year profit had dropped by more than a quarter to $1.41 billion from last March.
Both banks have warned that their bad loan problems may spread to consumers over the next 12 months, with hints that any further reductions by the Reserve Bank will not be passed on in full to consumers.
The banks remain under pressure from the Government to relieve the interest rate burden on consumers, with Treasurer Wayne Swan urging the banks to pass on cuts to consumers.
“As I have said many times, Australians have a right to expect their banks to pass on rate relief as soon as possible,”
ANZ chief executive Michael Smith said that they needed to balance the needs of consumers, with maintaining a strong banking sector.
“I want to cut rates as much as I possibly can,” he said. “The less strain there is on our customers the better.”
But it’s a case of actions speak louder than words. The recent cut to rates by the Reserve Bank to a 49 year low to three percent were welcomed by industry groups and consumers, however the big banks failed to pass on the cuts. NAB withheld all of the 0.25 percent rate reduction, while ANZ, the Commonwealth Bank and Westpac only passed on 0.1 percent.