Australian Government May Give Foreign Banks a Boost
Westpac Banking Corp., Australia & New Zealand Banking Group Ltd., National Australia Bank Ltd. and Commonwealth Bank of Australia have come under the fire of lawmakers for pushing up lending rates at a faster pace than the central bank's key rate, to maintain bumper profits and tackle higher funding costs.
CBA, for example, surprised borrowers this week by raising its variable mortgage rate to 7.81%, an increase of 0.45 percentage point—0.2 percentage point beyond the central bank's increase earlier the same day. For consumers, already under pressure from the rising cost of living, this adds about 100 Australian dollars (US$100) a month to the average A$300,000 mortgage.
When does this pressure start to exert itself on the default rate? And then when does the default rate start to exert pressure on prices?
Australian Treasurer Wayne Swan, a vocal critic of the country's banks, has promised a sweeping regulatory overhaul within six weeks. In addition to government guarantees for the mortgage-backed securities, measures being discussed include tax changes and reduced fees for changing banks.
Wait wait wait, you WANT to put the Australian taxpayers on the hook for all this? Seriously?