Thursday 29th March 2012

How you pushed up home loan rates

by Alan Thornhill

Australians are saving more – and that is pushing up both bank costs – and home loan rates.

Sounds strange, doesn’t it?

But Australians are not just saving more.

They are becoming smarter with their money.

They are placing more of it in term deposits, which pay relatively high interest rates.

That, of course, adds to bank costs.

These developments were behind the decision of Australia’s big four banks made last month to raise the rates they charge on home loans, even though the Reserve Bank had left its marker rate on hold in February.

Critics have suggested the banks could have got the money they need, to lend to home owners, more cheaply.

They said this money was available, at low rates, on international markets.

But that’s not what happened.

Indeed figures the Australian Bureau of Statistics published today show that deposits account for 54.3 per cent of bank liabilities, in the December quarter.

The Bureau said that was the, highest level since June 1996 .

See Australian National Accounts: Financial Accounts (cat. no. 5232.0)

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Profile

Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.

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