To make things worse, I’m a renter – and am paying for the privilege of living so close to the city – but that’s a separate story.
Anyway – with prices in almost all suburbs at record highs (as well mortgage stress levels) – I wonder whether the Commonwealth Bank really were justified in increasing interest rates 0.3 per cent – higher than the 0.25 per cent the RBA increased them today.
We are after all talking about a bank which recorded a 4.47 billion profit for the 2007 financial year.
Australian Council of Trade Union chief Sharan Burrow said the CBA chose profits over families, and warned the US sub-prime crisis happened because of banks pushing too borrowers over the edge.
Stockland chief executive Matthew Quinn also warned the RBA risks “breaking the camels back” – as in overseas economies – if it delivers too many interest rates to stretched borrowers.
The CBA, the biggest home lender in Australia, is expected to announce its 2H2007 profits on February 13, and no doubt the recent 0.3 per cent increase will improve the forecast for 1H2008.
I wonder whether the other major banks – ANZ, NAB and Westpac – were also thinking of passing on a 0.3 per cent rate rise, but decided against because of opportunities to benefit from negative sentiment surrounding the CBA at the moment.
I’d be interested to see the effects of a federal government plan which would make it easier for lenders to switch home loans. Federal Finance Minister Lindsay Tanner and Treasurer Wayne Swann announced yesterday these plans were being accelerated.