Australian PM vows to delivery bank reforms to ease household's pressure

16:58, November 16, 2010      

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Australian Prime Minister Julia Gillard on Tuesday promised to deliver further competition reforms on banking sector, in order to ease the pressure on Australians paying off a mortgage.

The move came as all four major banks enraged the government by pushing their mortgage rates beyond the Reserve Bank of Australia' s (RBA's) official movement.

The National Australia Bank (NAB) and Westpac on Friday became the last of the four majors to raise their mortgage rates above the 25-basis-point increase in official rates.

NAB raised its standard mortgages by 43 basis points to 7.67 percent, while Westpac moved by 35 basis points to 7.86 percent.

Last week, the Commonwealth Bank of Australia lifted its rates by 45 basis points to 7.81 percent, with the Australia and New Zealand Banking Group last Wednesday delivered a 39-basis-point increase to 7.8 percent.

"I understand that families are under pressure from interest rates and paying the mortgage," Gillard told parliament in Canberra on Tuesday.

"We want to make sure there is competition in banking so that people have got the ability to shop around and get a better deal."

Gillard noted Adelaide Bank offered a mortgage interest rate of 6.59 percent compared to Westpac's 7.86 percent, which she said could represent a monthly saving of about 245 U.S. dollars for borrowers.

Gillard said the move will allow Australian households to facilitate competition in banking.

"If you can enable people to move from one product to another, then they can look around for better deals, and use their purchasing power effectively as consumers to drive different conduct in our banking sector," she said, adding that the government will act to introduce further competition reforms in coming days.



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