By Shabnam Muzammil:
Regardless of the Reserve Bank of Australia’s (RBA) action in the coming months, the pressure on lenders to start reducing their variable mortgage interest rates is rising, The Herald Sun reported.
Although the central bank is unlikely to slash its official interest rate at tomorrow’s board meeting, experts said lenders should start putting back some of the rate cuts they withheld since November 2011.
"There’s public pressure and there’s also competitive pressure," said Shane Oliver, Chief Economist at AMP Capital.
One UBS analyst noted that government officials may implement tougher regulations to ensure borrowers get better rates if banks don’t act.
Moreover, the widening gap between standard variable bank rates and the RBA rate since 2007 is costing borrowers AU$350 (S$443) each month, said Joe Sirianni, Executive Director at Smartline Personal Mortgage Advisers.
“Following virtually every RBA cash rate movement over the past four years, the lenders have kept a little bit for themselves.”
“Five basis points here, 10 basis points there, it all adds up. Back in early 2009 when we last saw a three percent cash rate, borrowers were paying around 5.2 percent for their variable mortgage…fast forward four years and they are now paying 5.7 percent,” added Sirianni.
Shabnam Muzammil, Senior Journalist at PropertyGuru, wrote this story. To contact her about this or other stories email shabnam@propertyguru.com.sg
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