Home rates hit 9% but some savers will lose out

Jacob Saulwick
February 8, 2008
AP

BANK mortgage rates have hit 9 per cent for the first time in a decade, as the Federal Government finalises a plan to help customers switch bank accounts.

The Treasurer, Wayne Swan, will meet top economic advisers today to finalise the plan. The meeting comes as banks continue to pass on this week's Reserve Bank interest rate rise. St George Bank lifted variable mortgage rates by 0.25 percentage points to 9.02 per cent, while Westpac pushed rates up by the same amount, to 8.97 per cent.

AMP lifted its variable mortgage rate to 9.02 per cent after a 0.33 percentage point rise, 0.08 percentage points more than the official increase. NAB, which last month was the first bank to raise rates apart from official increases, continued last night to declare rates under review.

But some customers will miss out on higher deposit rates, as banks elect not to pass on the full rate rise to all deposit accounts.

The Government's plan, which could be unveiled today, is expected to force banks into helping customers switch their automatic credit and debit payments when they want to switch banks.

Consumer advocates said any changes making it easier to organise direct debits and credits would be long overdue.

Elissa Freeman, a policy officer with the consumer advocate Choice, said people could have up to 20 direct payments linked to their accounts, such as phone bills, council rates, gym membership, or E-Toll, where there is no choice but to use direct debit. "At the moment when consumers switch accounts they are required to get in touch with every direct debitor and creditor and inform them."

She said that when customers switched accounts in Britain the old bank was required to pass on the account details to the new bank.

Mr Swan has repeatedly called on customers to change banks if they are unhappy with banks raising rates.

Denis Orrock, the managing director of the consumer group InfoChoice, said Australian customers switched bank accounts less than in other countries. "You see inertia often quoted as the reason. But a lot of that apathy is based around the hassle."

Westpac yesterday pushed up deposit rates by 0.3 percentage points on some savings accounts, but St George and Bendigo Bank raised interest rates on some deposit accounts by less than the Reserve's increase.

It is understood Mr Swan's review is unlikely to tackle exit or "deferred establishment" fees. These fees are a big impediment to switching accounts, because they can hit customers with a bill for thousands of dollars when they opt out in the early years of a loan.

Today Mr Swan will meet the Council of Financial Regulators, whose members include the Treasury secretary, Ken Henry, the Reserve Bank governor, Glenn Stevens, and the chairman of the Australian Securities and Investments Commission, Tony D'Aloisio.