Westpac is the first bank to increase it’s mortgage interest rates following todays rise by the RBA and has surprised many analysts by raising rates by 0.45 pts. A whopping 0.2 pts more than the RBA.
This greedy exploitation of homeowners is likely to be repeated by the other major banks in the coming days now that Westpac have lead the way. Wayne Swan somewhat naively claimed that any bank that follows Westpacs lead can expect a severe backlash from it’s customers. In reality homeowners will grumble to themselves but very few will move to another lender. The banks know this which is why they feel that they can raise rates to such high levels.
Since the GFC the banks are in a stronger position having acquired their weaker lending rivals such as RAMS during the crisis. With less competition and the four major banks all likely to follow the lead of Westpac homeowners have little choice but to accept the rise.