An industry association has questioned whether the ACCC is using its new powers to hold banks accountable over the latest round of out-of-cycle rate hikes.
The Finance Brokers Association of Australia (FBAA) has hit out at last week’s pricing and policy changes, which included rate hikes from three of the big four banks and two non-majors.
FBAA executive director Peter White said some investor and interest-only loans have increased by as much as 66 basis points since the federal budget was handed down in May.
“It’s not just the big four that have done this,” Mr White said. “Most banks are doing it, but they haven’t justified their reasons for going this route.
“Are they passing on the bank levy to consumers before it comes into play on July 1, trying to slow the market, or destroy small business borrowers by restricting interest-only borrowings?”
Federal treasurer Scott Morrison announced on budget night that the ACCC has been directed to undertake an inquiry into residential mortgage pricing. The move follows the House of Representatives economics committee’s ‘Review of the Four Major Banks’, commissioned by the government last year, which concluded that Australia’s banking sector is an “oligopoly” and that Australia’s largest banks have “significant pricing power which they have used to the detriment of everyday Australians”.
Questions are now being asked over whether the latest rate hikes from the major banks are a response to the bank levy, and if the ACCC, which has been given powers to hold the major banks to account over their mortgage pricing decisions, are investigating the issue.
“We don’t know whether the ACCC has determined that these increases are okay,” Mr White said.
“While banks may claim these movements have nothing to do with the bank levy, they are leaving themselves open to criticism as it appears this isn’t the case.
“Where’s their compliance? Or is the issue that the ACCC is a toothless tiger?”
Mr White said some of the rate changes have been “quite extraordinary” and the market needs to know “what’s going on”.
Out-of-cycle rate hikes have now become commonplace, particularly for interest-only and investor loans, with the banks regularly citing APRA regulatory measures and increased funding costs as the chief reasons for repricing their mortgages.
[Related: NAB hikes IO rates by 35 points]