Banks reject claim of profiteering on mortgage rates
THE chief executives of Westpac and ANZ have rejected claims they profiteered from a regulatory crackdown on higher risk lending by hiking rates on all interest-only mortgages.
Westpac chief Brian Hartzer told the House of Representatives standing committee on economics in Canberra yesterday that it was a sensible point in time to encourage customers to pay down their debts by moving to principle and interest loans.
And his counterpart at ANZ, Shayne Elliott, said the bank had already begun “differentiating” home loan rates before regulators put a handbrake on interest-only lending. The Australian Prudential and Regulatory Authority in late March told banks to limit interest-only loans to 30 per cent of new mortgage lending.
Mr Hartzer said about half Westpac’s $400 billion mortgage book was made up of interest-only loans.
He said he was comfortable with that proportion as many customers were using offset accounts and making additional payments to reduce their level of debt.
In June, all four big banks hiked rates on variable interest-only mortgages.
David Coleman, the chairman of the parliamentary committee, asked why the banks hiked rates across all interest-only home loans when they could have simply capped the amount they lent out.
“We have two objectives – to meet the APRA requirements ... make sure the shape of our book is resilient and our customers are heading in the right direction,” Mr Hartzer said.