Face of Nation : The big four banks have suffered falls on the share market as federal treasurer Josh Frydenberg told mortgage holders to quit major lenders because they didn’t pass on an interest rate cut. Prime Minister Scott Morrison also accused the banks of profiteering after official interest rates dipped below one per cent for the first time, hitting a record low of 0.75 per cent in the third cut since June.
ANZ did pass on the full rate cut for people paying interest-only home loans. All four banks opened share trading lower on Thursday morning, following a second day of significant falls on Wall Street.
“People need to shop around – the only way the banks will get the message is through the voices of their customers and through their customers voting with their feet,” Mr Frydenberg told Sky News.
“Some of the smaller lenders have actually reduced their rates by that full 25 basis points and are offering rates below three per cent.” Mr Morrison said the banks “never learn”.”Mortgage holders have a reason to be disappointed in the banks, basically, profiteering,” he said.
The banks argued they needed to keep some margins in a low interest rate environment, and protect customers who save deposits. “They’ll put their explanations out there and the public will judge them based on what they say, but I’m not buying it,” Mr Morrison said.
Opposition Leader Anthony Albanese said the government was complacent about the banks and the economy.”The government needs to pressure the banks into passing on the full amount,” he told reporters.
Comparison site Mozo estimates the big four banks have clung onto an extra $4.7 billion since 2016 by not passing on the full cuts. The Reserve Bank is already preparing to cut rates further if the economy remains stagnant.
Meanwhile, Australia’s trade surplus fell to a slightly softer-than-expected $5.93 billion in August, narrowing 18 per cent from July’s revised $7.25 billion due to lower commodity prices.
Other economic figures show wage growth is low, jobseekers far outstrip job vacancies, and retail spending is struggling. The Reserve Bank said the rate cut was aimed at driving unemployment lower and lifting inflation.
While the share market result was rough for the big banks and other major companies, CommSec economist Craig James says it hasn’t been all bad news.
