The Australia Institute has revealed that Commonwealth Bank, National Australia Bank, Westpac, and ANZ collectively earn an average profit of $228,900 from a typical 30-year home loan valued at $736,000.
In the previous year, these financial powerhouses reported a combined pre-tax profit of $43 billion, with $16.9 billion stemming from homeowners with mortgages.
The Institute’s analysis showed that while owner-occupier mortgages comprised 22.7% of the big four banks’ loan portfolios, they contributed a significant 39.3% to the banks’ overall profits, highlighting an imbalance in profit generation.
These banks have joined the ranks of mining behemoths Rio Tinto and BHP, making them among the top six most lucrative companies in Australia.
Dr. Richard Denniss, co-chief executive of the Australia Institute, described these profit figures as “obscene.”
“While countless Australians struggle financially, the profits of these banks are steadily climbing,” he remarked.
“While so many Australians are going backwards, the banks’ profits are only going in one direction â up,” he said.
“In the first year of their mortgage, Australian homeowners are contributing more than $900 a month to their bank’s profit.”
The Institute also criticised the Reserve Bank’s decision to lift interest rates to 4.35 per cent at Tuesday’s board meeting.
The increase saw interest rates hit their highest level in 15 years.
Senior economist Matt Grudnoff said the decision risked pushing the country into recession, and that increasing interest rates would not reopen the Strait of Hormuz.
“All this does is heap more pain on already stretched households,” he said.
“The only tool the RBA has to fight inflation is to change interest rates. But interest rates are ineffective at stopping inflation caused by supply shocks.”
If Australia is nudged into recession, Grudnoff said, the RBA would be forced to rapidly lower interest rates again in an effort to stimulate the economy, which would be a “humiliating backflip”.
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