Westpac have announced that they will be slugging their Home Loan customers an additional 0.45% p.a. this Christmas. This increase in interest rate is nearly double the increase announced by the Reserve Bank. Westpac has attempted to justify this excessive rate rise with their current popular excuses being … “The Global Financial Crisis” … and … “The Increased Cost of Funds” … although many would consider that this latest action is nothing more than the Bank taking advantage of the current distractions in Canberra to add to their ever increasing profits.
In fact the major banks will profit well from the “Global Financial Crisis” as not only has the GFC smashed many of the smaller lenders, the Federal Government has also permitted the Big 4 to purchase several of their main competitors such as BankWest, St George and Rams. Considering that NAB also owns Homeside Lending and the Big 4 fund Home Loans through other smaller lending institutions, there is no great surprise that Westpac, NAB, Commonwealth Bank & ANZ have achieved record lending results over the last 12 months in which they have accounted for approximately 90% of Home Loans being written in Australia.
To add to this the fact that throughout the GFC the Big 4 have been able to obtain additional Home Loan funding from the Federal Government at costs much lower then is available to the smaller lending institutions, it is no wonder that Big Banks such as Westpac feel that they can do whatever they choose without any fear of retrobution.
Since taking office the Federal Treasurer (Wayne Swan) has stated many times that he will take action against the Banks if they become too greedy, but so far talking is all he has done. Perhaps Mr Swan should consider such actions as revoking the “Guarantee for Deposits” for those Banks who are looking after their own interests rather than that of the Australian economy. I’m sure this would grab Westpac’s attention and make the remaining Banks think twice before they consider following in the footsteps of their Big Bank bretheren.
Unfortunately I fear that the other major banks will shortly follow Westpac’s lead and borrowers will continue to incur the reprocussions. Fortunately with the ongoing demise of the GFC the smaller lending institutions will have the opportunity to once again compete on an even playing field and force the Big 4 (and their subsidiaries) to become more accountable within the marketplace.
