Credit union ups interest rate
HOLIDAY Coast Credit Union customers should brace themselves for an interest rate hike from today.
Chief executive Neville Parsons said that after ‘a lot of deliberation and plenty of financial modelling’, the credit union had determined an increase in all existing variable interest rate loans of 0.35 per cent per annum.
All overdrafts, both personal and business, will be increased by 0.35 per cent, from December 1.
“This follows the Reserve Bank of Australia Board’s increase by 25 basis points in the official cash rate to 4.75 per cent on November 2,” Mr Parsons said.
“Our assessment of what we require takes account of the increased funding costs that we, like all financial institutions, have experienced as a direct result of the global financial crisis.
“One reason for the increased funding costs in retail deposits is the fact that the large banks are now actively pursuing deposits from the retail market, a result of the increased cost of wholesale funds.”
Mr Parsons said this had resulted in increased cost of funds for all financial institutions.
“There is no longer any direct correlation between the official cash rate and the cost of retail deposits because the latter are priced according to demand rather than by reference directly to the cash rate.
“With banks’ wholesale funding costs set to rise further over the coming two years as cheap pre-financial crisis funding continues to mature and having to be replaced, there is a likelihood of further rates rises above the official rates, regardless of political pressure.
“As has been widely reported, the big four banks have moved their standard variable home loan rate up by between 0.35 per cent and 0.45 per cent, so our increase is at the lower end of this range.
“Holiday Coast Credit Union compares favourably to the major bank standard variable home loan rates with our most expensive home loan rate for new business being 0.12 per cent below the lowest bank rate and indeed there are various options that deliver a full one per cent saving against these banks.”