❓ Mr. Nalder questions why Keystart mortgage holders haven't received the full benefit of recent RBA interest rate cuts. The Treasurer explains that securitisation of Keystart loans by the previous government restricts their ability to pass on the cuts fully.
AnsweredQoN 871Legislative Assembly
QuestionView source ↗
INTEREST RATES —
KEYSTART LOANS
871. Mr D.C. NALDER to the Treasurer:
I have a supplementary question.
Again, given the state of the domestic economy, why has the Treasurer's government failed to pass on the full
interest rate cuts to Keystart mortgage holders after any of the last three
official rate cuts by the Reserve Bank?
KEYSTART LOANS
871. Mr D.C. NALDER to the Treasurer:
I have a supplementary question.
Again, given the state of the domestic economy, why has the Treasurer's government failed to pass on the full
interest rate cuts to Keystart mortgage holders after any of the last three
official rate cuts by the Reserve Bank?
AnswerView source ↗
There are a couple of points at play
here. The member may recall the securitisation of a large percentage of the
loans held by Keystart. Up until that point, the government's policy
was to have the average of the big four banks as the interest rate; I am
looking at the Minister for Housing to confirm that that is correct. That
securitisation contract took an unofficial policy of government and locked away
the contract, so that makes it more difficult to move interest rates; that is
the reality. I looked into this because I was curious about it myself. That
securitisation of part of the Keystart loan book actually locked away in a contract
the policy around interest rates, and that, of course, makes it more difficult
to move them around. Nonetheless, I am sure the Minister for Housing will have
more to say about that in due course. If a government—as the previous
government did—makes it more difficult for governments of the day to
change the interest rates they charge on their loans, the reaction is going to
be slower than we would like. Of course we, as the government, support the
passing on of interest rate cuts to Australians and Western Australians. As I have said publicly, Western Australia's
economy has historically reacted well to lower interest rates. I suspect
we are at a point now at which the reaction is not going to be as dramatic as
it would have been in the past, simply because of an environment of very low
interest rates. Nonetheless, when the Reserve Bank makes a decision on interest
rates, we fully expect that the banks, in an environment in which banks are
very, very profitable, will pass on those interest rate cuts to the benefit of
all Western Australians.
here. The member may recall the securitisation of a large percentage of the
loans held by Keystart. Up until that point, the government's policy
was to have the average of the big four banks as the interest rate; I am
looking at the Minister for Housing to confirm that that is correct. That
securitisation contract took an unofficial policy of government and locked away
the contract, so that makes it more difficult to move interest rates; that is
the reality. I looked into this because I was curious about it myself. That
securitisation of part of the Keystart loan book actually locked away in a contract
the policy around interest rates, and that, of course, makes it more difficult
to move them around. Nonetheless, I am sure the Minister for Housing will have
more to say about that in due course. If a government—as the previous
government did—makes it more difficult for governments of the day to
change the interest rates they charge on their loans, the reaction is going to
be slower than we would like. Of course we, as the government, support the
passing on of interest rate cuts to Australians and Western Australians. As I have said publicly, Western Australia's
economy has historically reacted well to lower interest rates. I suspect
we are at a point now at which the reaction is not going to be as dramatic as
it would have been in the past, simply because of an environment of very low
interest rates. Nonetheless, when the Reserve Bank makes a decision on interest
rates, we fully expect that the banks, in an environment in which banks are
very, very profitable, will pass on those interest rate cuts to the benefit of
all Western Australians.
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