FED:Greens want loans tied to cash rate moves

AAP General News (Australia)
12-08-2011
FED:Greens want loans tied to cash rate moves

CANBERRA, Dec 8 AAP - The Australian Greens will be seeking backing from the federal
parliament to make retail banks offer mortgages and small business loans that are linked
directly to movements in the official cash rate.

The proposal comes after something of a stand-off by the big four banks after the Reserve
Bank of Australia (RBA) cut the cash rate on Tuesday.

It was broken by the ANZ Bank on Thursday when it announced it would be pass on the
full reduction to mortgages and small business loans.

The other major banks - Commonwealth Bank of Australia, National Australia Bank and
Westpac - have yet to announce their intentions.

"Banks should be required to offer mortgages and small business loans that only go
up and down when the Reserve Bank changes its interest rate," Greens banking spokesman
Adam Bandt said in statement on Thursday.

"By requiring the banks to pass on any Reserve Bank rate cut in full, and by capping
any rise at the same amount set by the RBA, we will limit excessive profiteering and ensure
Australians get a better deal."

These products are sometimes known as 'tracker' loans and are already offered by some
banks in Australia, such as Queensland QT Mutual Bank, and in other countries.

The Greens want to make every bank offer them, so that customers can choose this kind
of loan if they want to be sure they will get the benefit of any rate cut in full.

Mr Bandt said if smaller banks can offer tracker mortgages, the big four should be
able to as well.

"Banks are quick to use the RBA rate to justify interest rate increases, but go slow
when there is a rate cut," he said.

The MP said banks did not just exist to make a profit, they also social obligations
that should be met.

AAP cb/rl/mjs

KEYWORD: RATES GREENS

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