๐๐ฎ๐ป๐ธ๐ ๐ฃ๐ฎ๐๐ถ๐ป๐ด ๐๐น๐ผ๐๐ฒ ๐๐๐๐ฒ๐ป๐๐ถ๐ผ๐ป ๐๐ผ ๐ฅ๐ถ๐๐ฎ๐น๐โ ๐๐ผ๐บ๐ฒ ๐๐ผ๐ฎ๐ป ๐ฅ๐ฎ๐๐ฒ๐
If you've ever wondered how banks decide their home loan interest rates, Australia's competition watchdog, the ACCC, has outlined the process following an inquiry into the retail deposits market.
Often, a โtrigger eventโ, such as a change to the cash rate, leads to an internal review of a bank's interest rate pricing, although the bank may also review its rates based on a schedule, according to the ACCC's report.
Regardless of what causes the review, the ACCC said a very similar decision-making process is used with interest rate decisions for home loans and retail deposit products (such as savings accounts) and that banks pay close attention to their rivalsโ rate decisions.
โBanks, regardless of size, typically consider the interest rates of major banks [i.e. the big four banks] when setting interest rates,โ the ACCC said.
โGenerally, the major banks tend to refer to a narrower set of banks in their pricing papers relative to the comparisons undertaken by mid-tier banks and mutuals. For example, the pricing papers of major banks
largely do not refer to the interest rates of mutuals [i.e. smaller, customer-owned banks], or refer to only a
small number of mutuals from time to time.โ
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