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Date Published : Thursday, August 07, 2008
Home loan customers are "unlikely to get any immediate relief" from a possible reduction in interest rates by the Reserve Bank of Australia because the country's big banks are "refusing" to commit to cutting their own rates, according to reports.
The Courier Mail said despite a slump in housing and "bad signs" in the employment market prompting many economic analysts to predict a cut in the base rate of interest as early as next month, many banks are being cagey about their intentions.
A spokesman for ANZ, which has six million personal and business customers in Australia and elsewhere, said "turmoil in global markets" means liquidity is still tight and the cost of lending is therefore higher.
"Any future decision on changing interest rates will depend on the situation at the time," he added.
Meanwhile, a representative of Westpac said "wholesale credit issues" were continuing to exert pressure on its lending activities.
At present, the average standard variable interest rate on home loans is "almost ten per cent", the newspaper said, whereas the RBA's base rate of interest is 7.25 per cent - a 12-year high.
If the Bank cuts the rate for the first time since December 2001 next month and banks do not follow suit, there could be "widespread political fallout" as household budgets are stretched.
The prime minister, Kevin Rudd, has previously called on banks to consider the impact on families when adjusting their loan rates, add that they continue to make "huge profits" from lending.
However, shadow treasurer Malcolm Turnbull blamed the government for the "dramatic slowing" of the economy, the newspaper said.
Treasury secretary Wayne Swan disputed the analysis, pointing instead to the high inflation inherited by the current administration and a worldwide economic downturn.
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