RBA supports banks on interest rates
Article by Mozo
Assistant governor at the Reserve Bank of Australia (RBA) Guy Debelle says he fully understands why the nation's lenders are often reluctant to pass interest rate cuts on to their customers.
People with mortgages and personal loans have been angered by their banks, as changes made to the national cash rate have not been reflected in the rates attached to their financial products.
The RBA reduced the official rate to 3.5 per cent earlier this year, but Aussies who have a loan of some description will almost certainly be paying far more than this.
However, Mr Debelle told the Australian Associated Press that banks have to take a number of other factors into consideration when calculating their rates – especially since the global financial crisis took hold.
Before 2008, lenders were able to follow the national cash rate more closely, but borrowing costs are higher nowadays and there are far more risks involved.
"Since mid-2007, our estimate is that banks' funding costs have gone up relative to the cash rate about 150 points (one and a half percentage points)," the RBA representative was quoted as saying.
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