Borrowers funding huge bank profits
A borrower with a three-year fixed-rate home loan of $300,000 pays a personal contribution to extra bank profit of between $75 and $125 of the monthly mortgage bill according to analysis by the Sydney Morning Herald.
Banks have increased the interest rates they charge customers more than their own costs have increased as a result of the global financial crisis which started in 2008. The Reserve Bank's most recent quarterly bulletin showed the big four banks had faced a 1.3 to 1.4 per cent increase in their funding costs since the crisis.
Fixed-rate mortgage borrowers on three- to five-year terms are paying 1.7 to 1.8 per cent above a benchmark rate, business borrowers are paying 2 per cent more and personal borrowers are paying an extra 3.4 per cent. Personal and business borrowers are also making big monthly contributions to bank profits. Borrowers on highly scrutinised standard variable mortgages have been subsidised by the banks by about $50 – $75 per month.
Source: Sydney Morning Herald