Silence on rising rates for business loans

THREE weeks ago when standard variable mortgage rates were raised out of cycle, there was an outpouring of criticism and bank bashing.

But earlier this week, when National Australia Bank lifted its ”liquidity margin” on business loans by 18 basis points to 1.13 per cent, there was silence.

While the federal Labor Party’s in-fighting may have been a distraction, it’s yet another example of how mortgage rates grab the headlines, while businesses get clobbered with very little reaction.

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That has long been a complaint of small-business lobby groups. That, and the fact there’s little transparency in the business loan market.

NAB says it publishes its lending rates every week for the sake of transparency, which its competitors don’t do.

And on Monday of this week it did publish its hike of 18 basis points.

Commonwealth Bank, meanwhile, accused NAB of doing it secretly, and has tried to convince NAB customers to switch to CBA, which doesn’t charge a liquidity margin.

At least homeowners have tools at their disposal that can help them compare mortgages.

And since the ANZ broke ranks with the major banks earlier this month, to move rates independently of the Reserve Bank, there are signs consumers have responded.

Damian Smith, the chief executive of Ratecity.com.au, says there’s been a 50 per cent surge in the number of people visiting the mortgage section of his website.

”We’ve seen a very consistent uplift in consumer interest since early February,” mr Smith said.

”People now expect that variable rates are going to move much more frequently by smaller amounts.

”I think most people now realise that there won’t be wild swings, but there will be regular movements from banks, completely independent from the Reserve Bank,” he said.

It seems the so-called link between the RBA’s cash rate and the rates at which banks lend to their business and personal customers has been well and truly severed.