The Prime Minister conceded yesterday he had lost control over mortgage rates as yet another bank lifted its rates independently of the Reserve Bank and in the face of opposition from the Treasurer.
Westpac declared late yesterday that it would lift its rate by 0.10 percentage points to 9.47 per cent, one working day after the National Australia Bank announced that it would lift its rate by 0.10 percentage points to 9.46 per cent.
Treasurer Wayne Swan said the NAB's Anzac Day announcement had been "a lousy thing to do".
Asked about yesterday's rate rise from Westpac, Mr Swan called on its customers to "vote with their feet" if they were unhappy and pointed to the Government's bank-switching package.
But the consumer group Choice said the package was "cold comfort" and bank customers were unable to decide which bank to move to because they all kept increasing their rates.
The banks have been leapfrogging each other since the start of this month when St George lifted its rate 0.10 percentage points above its nearest rivals, declaring that it was facing big cost pressures.
Days later the Commonwealth Bank announced a rise of 0.12 percentage points and on Thursday and Friday last week and on Monday this week, the ANZ, the National Australia Bank and Westpac each announced increases of 0.10 percentage points.
These increases are independent of any instigated by the Reserve Bank which decided to leave rates unchanged this month.
They follow an unofficial go-ahead from the governor of the Reserve, Glenn Stevens, who said last month it would be be "unrealistic" not to expect banks to lift their rates independently in the current climate. "I think that's just life in this environment," he said.
Prime Minister Kevin Rudd conceded yesterday that he was powerless to stop the increases just as he was powerless to prevent petrol prices soaring and grocery prices increasing.
"There's no silver bullet here," he said.
"Working families are under financial pressure, not least from recent increases in mortgage payments, but also what's happened with petrol prices and what's happening with grocery prices.
"Our commitment is to do everything we can through the budget to assist."
He said preparing the budget was "as tough as all hell".
Opposition treasury spokesman Malcolm Turnbull said yesterday the Government would need to cut more than $5billion of spending in the coming year in the budget to have a significant impact on inflation.
And in a discussion paper issued yesterday, the Property Council of Australia warned the ACT economy was too reliant on the property boom and was in desperate need of an economic back-up plan.
A spokesman for Choice, Christopher Zinn, said the banks were beyond control. "Customers can't move between banks, not easily, and what the Treasurer says seems to have no effect," he said.
"I have no doubt that their costs are increasing as they say, but they are not being open with the public about the reasons for the timing of their increases.
"Why did one bank announce it on Thursday, another on Anzac Day and another on Monday? It looks as if they are using each other for cover."
For more than a decade until the financial crisis last year none of the big five banks had increased their rates independently of the Reserve Bank.
Westpac's group executive for consumer financial services, Peter Clare, said the bank took its decision balancing the needs of its customers with the needs of its shareholders and staff. "We are mindful that this additional rise will have an impact on some family budgets but we want to reassure the community that we have responsible lending practices in place that offer a number of options to help customers manage," he said.
The NAB's standard variable mortgage rate has risen nearly 0.8 percentage points this year.
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