An entrepreneurial think-tank is calling for hasty action on the number of banks still charging high interest rates on their fixed mortgages - for the country's sake.
The Productive Economy Council today said the government needs to take account of the fact that 80 per cent of mortgageholders are still stuck on inflated interest rates while the cost of money has plummeted.
"The PEC believes that this additional cash flow benefit could be going into the economy instead of repairing the balance sheets of our bankers", said spokesman Selwyn Pellett.
"A rough calculation would suggest the benefit to the country is between $30 and $70 million a week, with the only obstacle being the inflated bank break fees.
"No one is suggesting that banks aren't entitled to make a profit or that banks should not get their original contracted margin between the cost of borrowing and the cost of leading, but current breaks fees look more like gouging," says Selwyn Pellett.
Pellett said the PEC is encouraging the government to have a decent look at this issue.
"If the argument from the banks is that they borrowed at the time to cover their customers' loans then the margin is established and break fees can be calculated based on actual loss to the bank, which seems fair and reasonable.
"It is however reprehensible if banks attempt to capitalise on a collapsing economy by using the new low official cash rate figures to trigger inflated break fees and hold customers hostage to the inflated interest rates," he said.
Critics will suggest that consumers should have left their interest rates floating and therefore are partly to blame but Pellett argues that as interest rates went from 7-8 per cent to 9- 9.5 per cent that the consumers who attempted to maintain a floating rate were the last to fix, and were forced to do so before they lost their ability to retain their homes.
