Interest rate levels questioned.
Media statement Wednesday, November 19th, 2008
Interest rate levels questioned. Banks should explain
The widening margin between the Official Cash Rate and mortgage rates has led the Employers & Manufacturers Association (Northern) to issue a 'please explain' challenge to the trading banks.
"The Official Cash Rate is 6.5 per cent and dropping while floating mortgage rates are remaining stubbornly at 9.5 per cent or more," said Bruce Goldsworthy, EMA's acting chief executive.
"It appears on the face of it that the banks are profiteering.
"Their margins appear to be twice what they were a year ago.
"Businesses and homeowners alike need to know why mortgage and other interest rates are still staying so high.
"Many businesses interest rates are tied into the collateral of their owners' homes, and its important that all home owners these days have as much disposable income as their mortgage repayments will allow.
"The banks may be facing higher risk but the raft of government and Reserve Bank guarantees has underwritten them, at the tax payers' expense.
"In the words of the song 'we're all in this together,' so let's hear far more from the banks about their business practices in today's economic turmoil, and why interest rates are still so high."