Interest rate rise hurts families
A COFFS Harbour financial counsellor says more local families will feel financial stress if all of the major banks raise interest rates.
Kevin Batterson of Lifeline North Coast issued the warning yesterday after the Commonwealth Bank was the first to lift its mortgage rates.
The CBA raised its rates by 45 basis points, a move which will net it an extra $500 million.
It followed the Reserve Bank’s raising of the cash rate by 25 basis points to 4.75 per cent on Tuesday
“There are a lot of families out there struggling already under increases in the cost of living,” Mr Batterson said.
“Higher electricity, water, gas and petrol prices, rising food costs, increased council rates and now further interest rates rises,” Mr Batterson said.
“It is certainly unconscionable that a bank can raise its rates on the same day, yet they take weeks to consider lowering them.
“Australian banks haven’t been through a great financial crisis – just look at their profits over the past 12 months,” Mr Batterson, a former bank lending manager, said.
Working two days a week, he sees three people a day in need of financial assistance.
Coffs Harbour’s other counselling service Anglicare says it sees on average 200 people each year.
“Generally there’s a wait of two weeks for an appointment, but then there are the desperate cases we respond to immediately where people are on the brink of losing their houses, getting the power cut-off, and being hounded everyday by creditors,” he said.
Leading voices in the real estate industry also criticised the rate rise.
Brian White, chairman of the Ray White Group, says the RBA had overlooked the impact of a rate rise on the property market.
“Listings for October were up 3.5 per cent on the previous month and up the same amount on this time last year, but buyer response has been subdued by the anticipation of a rate rise,” Mr White said.
“Buyer expectations that higher rates are just around the corner has resulted in a similar home-buyer response to an actual rate rise.
“It’s a shame that the property market has had to burden the mixed blessing of a two-speed economy,” he said.
Archicentre State Manager Ian Agnew said rising rates would cut household budgets to the core.
“There is now little margin for people to make a mistake when purchasing a property. An estimated 75 per cent of property transactions take place without a property inspection, placing buyers at risk of purchasing a lemon,” Mr Agnew said.
Coffs Harbour Aussie Home Loans broker Craig Budden recommended borrowers should seek to reduce their interest costs by refinancing.
Mr Budden said people should weigh up the penalty costs of getting out of an existing loan and establishment fees for starting new loans.
He said borrowers should also consider switching from variable to fixed interest rates.