Penalty fee cuts pressure mortgage rates

Westpac has made the deepest cuts to penalty fees out of the four big banks according to analysis by brokerage Citigroup.

Westpac is expected to lose about $300 million from its move to reduce and abolish many penalty fees charged to account and credit card customers.

Commonwealth Bank will lose $200 million by cutting dishonour fees from $40 to $5, while ANZ will lose $140 million, although ANZ will increase its monthly account keeping fees, helping minimise the impact on its bottom line.

National Australia Bank stands to lose about $120 million in revenue, with fewer products affected.

Analysts say the moves to cut or abolish penalty fees will put pressure on the banks to raise rates on mortgages to recover some lost revenue.

Source: Brisbane Times