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As campaigning enters its final few days, the Green Party has reiterated its vow to cap bank profits and lower mortgage rates.
The Australian Greens have reiterated their pre-election pledge to force banks to set mortgage rates at a maximum of 1 per cent above the cash rate, in a bid to aid first home buyers and ease the housing crisis.
While campaigning in Melbourne on Tuesday (29 April), Australian Greens Leader Adam Bandt and Victorian Greens Leader Ellen Sandell laid out plans that would require the five largest lenders (CBA, Westpac, NAB, ANZ, and Macquarie Bank) to offer a discount mortgage called HomeKeeper to all home owners, including first home buyers and owner-occupiers.
Ahead of the federal election on Saturday (3 May), the Greens said that with HomeKeeper mortgages, the interest rate would be 1 per cent above the Reserve Bank of Australia (RBA) cash rate, meaning big banks would make a “more reasonable” profit while mortgage holders would pay less on mortgage repayments.
How would HomeKeeper work?
The discount HomeKeeper mortgage would be available to any owner-occupier, whether or not they are a first home buyer.
The Greens said that borrowers with a current mortgage on their home would be able to transfer into HomeKeeper. However, it would not be available for investment property mortgages, commercial premises, or holiday homes.
Support would be provided to smaller banks so that they could offer a similar low-rate product without being financially disadvantaged.
The big banks could still offer other products and there would be no compulsion on anyone to switch to a HomeKeeper mortgage, the Greens said.
The Greens also want to give the Australian Competition & Consumer Commission (ACCC) and the Australian Prudential Regulation Authority (APRA) the independent power to “stop banks ripping people off” and ensure big banks don’t unnecessarily overcharge.
The policy would be delivered by legislating a cap on the profit a big bank can make on a mortgage product.
Commenting on lenders’ mortgage rates, the Greens said major banks had made “enormous profits price-gouging” on mortgages, even when interest rates were low.
The party said that, for a new mortgage holder with an average-sized home loan, a reduction in their interest rate from 6.1 per cent to 5.1 per cent would save them up to $419 per month or $5,038 per year.
Bandt said: “For too long, big banks have been ripping people off by charging interest rates well above the cash rate. They’re crushing mortgage holders, making billions of dollars in profits ripping off struggling mortgage holders by overcharging them on their mortgage.
“Our plan will reduce the costs of mortgages for everyone by limiting the amount at which banks can rip people off.”
Housing supply and affordability have featured heavily in the run-up to the election, with the Labor Party, the Coalition, and the Greens all rolling out initiatives to quell concerns over the housing crisis.
[Related: ‘Immense pressure’ on many first-time home buyers, CoreLogic warns]
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