Banks 'seek safety in numbers' on home loan hikes

Wednesday 20 October 2010

Article by Mozo

Australia's major banks may be seeking to minimise their potential PR problems by collectively declaring the need for home loan rate rises, it has been suggested.

John Collett of the Sydney Morning Herald noted that a number of bank chiefs including Westpac boss Gail Kelly and Commonwealth Bank's Ralph Norris have recently spoken out in order to signal the same intention – namely that they may soon raise interest rates independently of the Reserve Bank's cycle.

He commented that this technique has been a way of "softening up" the press and public by offering explanations about higher funding costs following the global financial crisis.

"Perhaps doing this through the media will reduce the chance of a repeat of last time around when Westpac went alone," said Mr Collett. "Safety in numbers."

The commentator was referring to last December when Westpac suffered a PR disaster after hiking its standard variable rate by 45 points following a 25 point increase by the RBA.

Mr Collett suggested that the dominance of "the big four" banks made impending independent rate rises likely. He therefore urged borrowers to shop around and compare home loans in search of more competitive offers.

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