Australian banks profiteering

by Richard Kilner

Story link: Australian banks profiteering

Australia’s largest banks have been accused of profiteering by the Reserve Bank.

The accusation comes after the banks were swift to hike interest rates for mortgage repayments, but have yet to pass on the increase in interest rates to savings accounts.

Those with savings accounts should have seen a rise of around 0.5%.

In August, credit unions raised rates by a mere 0.1%, and some building societies have actually reduced the rate paid out to savers, leaving them in a worse position despite the central bank raising interest rates.

Online savers benefited most, with a 0.15% rise in their rates.

The Reserve Bank published a report on Thursday which showed that the advantageous side to rate rises often take around a month to be passed onto customers, whereas the negative side (most notably regarding mortgage repayments) are almost instantaneously passed on.

Transaction accounts holding less than $5,000 yield no interest whatsoever.