Banks shy away from RBA cuts

Wednesday 29 April 2009

Article by Mozo

With concerns growing about the bad debt soaked up by Australia’s biggest bank, it is becoming increasingly unlikely that any further interest rate cuts from the Reserve Bank will trickle through to home loan interest rates, the Sydney Morning Herald warns.

In news that may encourage those looking to compare home loans to consider a fixed-rate deal, the paper warns that banks are going to be unable to pass on any further rate cuts because they need to cover the bad loans made to businesses, homeowners and credit card users.

Despite this concern, ANZ chief executive Michael Smith told the paper that he is keen to cut rates as much as he possibly can.

Meanwhile, treasurer Wayne Swan commented: "As I have said many times, Australians have a right to expect their banks to pass on rate relief as soon as possible."

Earlier this month, Credit Suisse predicted that the Reserve Bank may bring rates down again as early as next month.

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