Levy pain eased with rate hikes by big banks – 5th July 2017

Interest rate increases from the banking sector have already recouped about half the cost of the federal government’s major bank levy, with property investors and the most indebted owner-occupiers with interest-only loans supporting the sector’s profits. Although the major banks have said that the recent rate rises of 30-35 basis points on ¬≠interest-only borrowers are not related to Scott Morrison’s $6.2 billion bank levy, they will increase profits over the financial year. Macquarie Wealth analyst Victor German said although ANZ, Commonwealth Bank, National Australia Bank and Westpac passed on rate cuts of between three and eight basis points for owner-occupiers paying down loans with both principal and interest, the larger rate increases on interest-only borrowers would more than offset the cost of lower rates for owner-occupiers.