Mortgage Interest Rates Continues Rising Despite A Stagnant Cash Rate In Australia
The cost of servicing a mortgage has increased at its fastest rate in more than seven years for most Australians, despite the 16-month freeze of the Reserve Bank on the cash rate.
According to the latest cost of living data from the Australian Bureau of Statistics (ABS), interest on mortgages for employed Australians increased 4.5% since December, more than double the official inflation rate. (The official cash rate has remained frozen at 1.5%).
On Wednesday, a controversial report from the Productivity Commission accused the Big Four of taking advantage of existing customers by offering higher interest rates than new customers.
The Productivity Commission added that loyal customers were “ready to be exploited”, with one in two people still banking with their first bank and accepting interest rates on mortgage loans up to 0.4% more than new customers.
The report found that the Turnbull government and the Australian Prudential Regulation Authority (APRA) had inadvertently provided an unexpected gain of $ 500 million to the banking sector in its effort to cool overheated housing markets in the capitals of the east coast.
The banks have responded to APRA’s orders to stop interest-only mortgage loans by raising interest rates, not only for new loans, but also for all mortgage loans for existing investors.