Banks rake in fat profits

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David Koch explains how choosing the right mortgage can save you lots.

The big four banks have collectively raked in a whopping $98 million since they hit both owner occupiers and investors with out-of-cycle rate hikes and more are expected to come.

THE big four banks have collectively raked in a whopping $98 million since they hit both owner occupiers and investors with out-of-cycle rate hikes and more are expected to come.

The Reserve Bank of Australia board met on Tuesday and kept the cash rate on hold at 1.5 per cent where it has sat since March, but that hasn’t deterred the banks lifting rates and putting more financial pressure on borrowers.

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Data crunched by financial comparison website Mozo found Westpac was the biggest winner since the latest round of out-of-cycle variable rate hikes hit in late March, reaping in an estimated $49.8 million in interest charges.

Westpac has raked in an estimated $49.8 million in extra interest revenue since hikes rates earlier this year.

Westpac has raked in an estimated $49.8 million in extra interest revenue since hikes rates earlier this year.Source:Supplied

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This is followed by ANZ ($20.6 million), National Australia Bank ($18.9 million) and the Commonwealth Bank, which includes Bankwest, at ($8.3 million.)

ANZ announced yesterday (Tues) their profits had climbed by a massive 23 per cent in the six months to the end of March to $3.4 billion.

Mozo spokeswoman Kirsty Lamont said borrowers “continued to be hit hard by out-of-cycle rate rises” and there was no end in sight.

Mozo spokeswoman Kirsty Lamont said customers need to look around to ensure they are getting a good deal.

Mozo spokeswoman Kirsty Lamont said customers need to look around to ensure they are getting a good deal.Source:News Corp Australia

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“The problem we are seeing is mortgage stress is becoming a problem and is growing consistently while wages remain stagnant,’’ she said.

“This is harder to justify particularly after we see ANZ’s profit increases and whether these rises are necessary.”

Mozo figures show on a $300,000 30-year home loan the average variable rate is 4.45 per cent and monthly repayments are $1511.

The average three-year fixed rate is 4.15 per cent and monthly repayments are $1458.

Mortgage Choice chief executive officer John Flavell said there remained “a lot of volatility in the market” and lenders continued to increase rates across all product types.

Mortgage Choice chief executive John Flavell said he has seen an increasing number of customers fix their home loans.

Mortgage Choice chief executive John Flavell said he has seen an increasing number of customers fix their home loans.Source:Supplied

“We are seeing an increasing proportion of customers opting to fix part or all of their home loan,’’ he said.

“Throughout the month of April, 26.47 per cent of all new customers decided to fix part or all of their mortgage — up from 20.89 per cent the month prior.”

The Australian Prudential and Regulation Authority sent a stern warning to all lenders earlier this year announcing it was imposing even tougher restrictions on their lending practices that would hinder their growth.

The restrictions limit the flow of interest-only lending to 30 per cent of total new mortgage lending.

Home Loan Experts’ managing director Otto Dargan said, “Most lenders have already put up rates for interest only and investment loans or are considering doing it now so borrowers will need to act fast.”

sophie.elsworth@news.com.au

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