Yesterday Andrew Little criticised the banks’ failure to pass on the cut in Official Cash Rate (OCR) to we the people via mortgage / interest rate cuts:
Little to banks: Pass on rate cuts or suffer consequences
Opposition leader Andrew Little says Labour will consider forcing banks to pass on cuts in the Official Cash Rate (OCR) to customers if they did not respond to a “stiff-arming”.
Mr Little’s comments come after several of the main banks only cut their interest rates on loans by a portion of last week’s 0.25 point cut, down to 2.25 per cent.
Mr Little said if Labour was in government it would start with “pretty serious talking” with the banks.
If the Government’s expectation was for banks to pass on drops in the OCR to lenders, it should make that very clear “and be very firm about it and should remind banks that it does have powers the banks don’t have”.
The simplistic form of what Little suggested might be too blunt a tool, but some version of it doesn’t seem unwarranted. In fact, it should be part of a broader investigation into whether banks are blatantly ripping of NZ. Here’s some headlines for context.
From 2013: NZ’s big banks record $3.5b profit: “New Zealand’s big four banks collectively made more than $3.5 billion in the last year in another record year for the sector…”
From 2014: Banks’ profits explode as bad debts reduce: “Expert says sector’s ballooning rate of profit growth can’t be sustained for another year….”
From 2015: NZ’s big banks continue record run with $1.69b three-month profit and ASB, ANZ, BNZ and Westpac rake in $4.59 billion of profits: “All four major Australian-owned banks have continued record runs of profitability, with a combined haul of $4.59 billion. The staggering figure represents more than $1000 for every person in New Zealand…”
Or as Andrew Little put it (same piece as above):
He said the banking sector had been very profitably through good and bad. “I think, frankly, they can do better for New Zealand.”
Updated with a bonus headline from RNZ this morning:
Why are credit card rates still so high?
Banks are being criticised for keeping credit card interest rates at nearly 20 percent despite general interest rates being at their lowest in decades.
Last week, the Reserve Bank cut the Official Cash Rate (OCR) to 2.25 percent. Floating mortgage rates with the main banks are now below 6 percent, with some fixed rate mortgages just over 4 percent. Credit card rates, however, have hovered around the 20 percent mark for several years. …
Good question, don’t you think?