Australia’s Greens Party has introduced laws today to place restraints on the ability of the nation’s biggest banks to increase mortgage interest rates.
The Greens proposal in the lower house of parliament would give the Australian Prudential Regulatory Authority powers to prevent banks from raising their mortgage fees above their cost of finance. Banks must also offer fee-free bank accounts and cap exit fees charged on someone who transfers their mortgage to another lender, the laws from Greens member Adam Bandt said.
Westpac Banking Corp. and National Australia Bank Ltd. on Nov. 12 announced increases to their standard variable home-loan rates, following moves by Australia & New Zealand Banking Group Ltd. and Commonwealth Bank of Australia. All four raised charges by more than the Nov. 2 quarter-percentage point move by the Reserve Bank of Australia, triggering a backlash by homeowners and verbal attacks from lawmakers.
“Enough is enough,” Bandt told parliament today as he introduced the banking laws, which will be debated in the coming week. “It’s time we stopped banks profiteering at the expense of their customers.”
The Greens also want to put a 24-month freeze on the so-called “Big Four” domestic banks from raising their interest charges by more than the Reserve Bank, Bandt said. That would require an amendment to the laws put to parliament today.
Mortgage rates are a topic of public debate in Australia, where more than 90 percent of homeowners have variable-rate home loans. Australian Treasurer Wayne Swan said the government was working on changes to the banking industry that would increase competition. A measure of financial stocks on the benchmark S&P/ASX 200 Index has declined almost 10 percent this year.
“We’ve got a second round of competition reforms coming,” Swan told Australian Broadcasting Corp. radio today. “We’ve had bad behavior from the big four banks.”
While the government, which relies on the support of four non-party lawmakers, can’t regulate the nation’s interest rates, it will give more powers to the competition regulator in a banking reform package to be announced next month, Swan said.