You won’t believe the SHAMELESS messages banks are sending Aussies – as they make BILLIONS hiking mortgages rates and ignoring calls to pass them on to savers: ‘Here to help’
- The big four banks have been quick to raise mortgage rates but slow with savers
- Commonwealth Bank, ANZ, NAB and Westpac has increased their variable rates
- Announcements made a day after Reserve Bank’s 0.5 percentage point July rise
- In May and June, big banks were quick to raise loan rates but slow with savers
- Banking giants all released July statements saying they cared about customers
Australia’s big banks have issued gushing statements declaring they care about their customers, despite being quick to put up mortgage rates but slow to reward savers following RBA rate hikes.
The Commonwealth Bank, ANZ, NAB and Westpac on Wednesday announced they would raise their variable rates by half a percentage point in line with the Reserve Bank of Australia’s latest July move.
They confirmed their variable rates would be going up within a fortnight, a day after the RBA on Tuesday increased the cash rate by 0.5 percentage points to a three-year high of 1.35 per cent.
The RBA increased the cash rate in May, June and July for three straight months for the first time since 2010, with the 1.25 percentage point rise the steepest inflicted on borrowers since 1994.
The Commonwealth Bank (Sydney branch, pictured), ANZ, NAB and Westpac on Wednesday announced they would raise their variable rates by half a percentage point in line with the Reserve Bank of Australia’s latest July move
With each rate rise this year, the big four banks have been quick to declare their variable mortgage rates would rise in line with each RBA move.
But in May and June, the banks were slow to reward savers, with July the first time in this interest rate tightening cycle they have increased savings rates straight away.
Now the big banks have released gushing statements declaring how much they cared for their customers, despite inflicting more pain on home borrowers.
Angus Sullivan, CBA’s group executive of retail banking, said the Commonwealth Bank cared about its customers.
‘We are here to support our customers and have a range of tools to help them manage their repayments online,’ he said.
‘We understand the rapidly changing rate environment may raise questions for some of our customers and we are here to help them.’
ANZ, the second bank to declare an increase in variable mortgage rates, suggested it was there to help customers.
Its group executive of Australian retail banking Maile Carnegie said:’ As the cost of living has risen, some customers may be looking for support while they reconsider their household budgets and ANZ is here to support them.’
Australia’s big banks have suggested they care about their customers despite putting up mortgage rates immediately but being slow to reward savers (pictured is a NAB branch in Melbourne)
Big banks declare they ‘care’
COMMONWEALTH BANK: ‘We are here to support our customers … we are here to help them’
ANZ: ‘some customers may be looking for support while they reconsider their household budgets and ANZ is here to support them’
NAB: ‘We are here to help’
WESTPAC: ‘We know that some customers will be reassessing their household budgets as home loan interest rates rise’
NAB’s group executive of personal banking Rachel Slade also suggested National Australia Bank is there to assist those in need.
‘For any customer who is interested in understanding what the increasing interest rate environment means for their home loan, or concerned about their financial situation, we are here to help,’ she said.
Westpac, the last bank to confirm an increase in its variable mortgage rates, wheeled about Chris de Bruin, its chief executive of consumer and business banking to express concerns about the cost of living.
‘We know that some customers will be reassessing their household budgets as home loan interest rates rise,’ he said.
‘While the majority of our home loan customers are ahead on repayments and in a good position to adapt to interest rate changes, some may find it more challenging.’
Max Markson, who has worked in public relations for the past 40 years, said insulting the intelligence of customers would hurt the banks.
‘They get zero out of 10 from me for how they’re handling their PR and how they’re handling the statements,’ he told Daily Mail Australia.
ANZ, the second bank to declare an increase in variable mortgage rates, suggested it was there to help customers (pictured is group executive of Australian retail banking Maile Carnegie who said ANZ is ‘here to support them’)
Max Markson, who has been worked in public relations for the past 40 years, said insulting the intelligence of customers would hurt the bank
‘The public sees through it, that’s why more and more people are going to non-bank lenders; they’re leaving banks and it’s the banks’ fault because the banks don’t know how to do customer retention.
‘People don’t believe a word they say. What they’re smarter to do is tell the truth.’
Variable mortgage rates are increasing despite the banks receiving $188billion in taxpayer funds from the Reserve Bank’s Term Funding Facility in 2020 and 2021 to provide cheap home loans.
Digital Finance Analytics principal Martin North, who has worked in the banking industry, suggested it was time the banks were taxed as they raised variable mortgage rates.
‘Note this means the banks will be getting an evening bigger windfall from the TFF facility – time to impose a windfall tax,’ he said.
Financial markets are expecting the RBA cash rate to hit 3.5 per cent by March 2023. Should that prediction come true, a borrower with an average $600,000 mortgage would see their monthly repayments surge by $927 or $11,124 a year (pictured is the Australian Securities Exchange 30-day interbank lending rate)
In the second half of 2021, the Commonwealth Bank made a half-year net profit of $4.746billion – an increase of 23 per cent compared with the final six months of 2020.
Interest rate forecasts from the banks and financial markets
COMMONWEALTH BANK: 2.1 per cent by November 2022
WESTPAC: 2.35 per cent by February 2023
NAB: 2.1 per cent by December 2022
ANZ: 2.6 per cent by February 2023
ASX 30-DAY FUTURES: 3.5 per cent by March 2023
Financial markets are expecting the RBA cash rate to hit 3.5 per cent by March 2023.
That is well above the CBA’s forecast of a 2.1 per cent cash rate by November, Westpac’s prediction of a 2.35 per cent level by February or ANZ’s warning of a 2.6 per cent rate by February 2023.
Savers miss out as rates rise
Should the futures market prediction come true – and the RBA hikes rates eight more times to 3.5 per cent – a borrower with an average $600,000 mortgage would see their monthly repayments surge by $927 or $11,124 a year.
That’s based on an existing variable rate with the Commonwealth Bank climbing from 2.89 per cent, under the old RBA rate of 0.85 per cent, to 5.54 per cent.
This month, CBA’s popular variable rate will be increasing to 3.39 per cent to reflect the half a percentage point increase in the RBA cash rate to 1.35 per cent.
CBA, ANZ and NAB are raising their variable lending rates from July 15 while Westpac’s increases come into effect on July 20.
When the RBA raised the cash rate in May by 0.25 percentage points, the first official increase since November 2010, the big banks were quick to raise their variable lending rates – issuing announcements on the same day.
This increase ended the era of the record-low 0.1 per cash rate, taking it to 0.35 per cent.
NAB’s group executive of personal banking Rachel Slade also suggested National Australia Bank was there to help those in need
It was also the first increase during an election campaign since November 2007, when another former Liberal prime minister John Howard lost the election.
By the next day, the Commonwealth Bank was the only one of the big four to fail to increase its bonus saver rate and didn’t budge throughout May.
None of the big four banks raised their online savings rates straight away.
The RBA’s June rate rise of 0.5 percentage points was the biggest monthly increase since February 2000.
All the big banks matched that RBA rate hike taking the cash rate to 0.85 per cent.
But three of them – Westpac, NAB and ANZ – declined to immediately raise their everyday savings rates.
What a 0.5 percentage point rate rise in July means for borrowers
$500,000: Up $136 from $2,079 to $2,215
$600,000: Up $163 from $2,495 to $2,658
$700,000: Up $191 from $2,910 to $3,101
$800,000: Up $218 from $3,326 to $3,544
$900,000: Up $245 from $3,742 to $3,987
$1,000,000: Up $273 from $4,157 to $4,430
Monthly repayments based on popular Commonwealth Bank variable rate rising from 2.89 per cent to 3.39 per cent should the Reserve Bank cash rate in July rise from 0.85 per cent to 1.35 per cent
RateCity research director Sally Tindall said at the time: ‘Savers hoping to get a big boost with the RBA hike shouldn’t hold their breath.’
Angus Sullivan, CBA’s group executive of retail banking, suggested the Commonwealth Bank cared
Banks finally get the message
In July, the big banks received the message, and announced increases to their savings rates as they confirmed variable mortgage rates would also go up.
‘For the first time in what feels like forever, savers finally have options – and decent ones at that,’ Ms Tindall said.
CBA’s GoalSaver increasing by 0.5 percentage points to 1.25 per cent from July 15.
The YouthSaver account for Commonwealth Bank customers under 18 will see its savings rate rise by half a percentage point to 1.45 per cent.
ANZ is now offering a new 11-month Advance Notice term deposit rate of 2.5 per cent per annum, effective July 11.
ANZ will also increase the bonus interest rates on its Progress Saver and ANZ Plus accounts by 0.5 percentage points to 2 per cent, with both changes coming into effect on July 15.
Westpac, the last bank to confirm an increase in its variable mortgage rates, wheeled about Chris de Bruin, its chief executive of consumer and business banking to express concerns about the cost of living
NAB’s Reward Saver bonus rate will increase by 0.5 percentage points per annum from July 15.
NAB’s 12-month Term Deposit account will increase to 2.5 per cent per annum from that day.
Westpac Life savings customers will see a 0.5 percentage point per annum increase from July 22, bringing the total variable interest rate to 1.35 per cent per annum.
Savers will be able to access a new Term Deposit offer of 2.5 per cent per annum for terms between 12 to 23 months from July 8.
The other banks have increased their savings rates.
Smaller player ubank is increasing its Save account by 0.5 percentage points to 2.35 per cent from August 1.
MyState is increasing its Bonus Saver by half a percentage point to 2.1 per cent from July 18.
Suncorp is increasing its Growth Saver by 0.7 percentage points to 2 per cent from July 13.
Macquarie Bank is increasing the rate on its transaction account by 0.25 percentage points to 1.75 per cent, effective July 14, making it the highest rate for a transaction account in Australia, a RateCity analysis showed.
What a surge in the RBA cash rate to 3.5 per cent would mean for YOU
$500,000: Up $773 from $2,079 to $2,852
$600,000: Up $927 from $2,495 to $3,422
$700,000: Up $1,083 from $2,910 to $3,993
$800,000: Up $1,237 from $3,326 to $4,563
$900,000: Up $1,391 from $3,742 to $5,133
$1,000,000: Up$1,547 from $4,157 to $5,704
Figures based on the Commonwealth Bank’s popular standard variable rate increasing from 2.89 per cent to 5.54 per cent based on the Reserve Bank of Australia cash rate increasing from 0.85 per cent (pre July RBA rate rise to reflect existing variable rates) to 5.54 per cent