As the Reserve Bank of Australia (RBA) continues to increase interest rates to achieve an inflation target between 2-3%, the banking sector, rather than struggling consumers, stands to benefit. This situation is exemplified by Westpac's recent announcement of a staggering $7.2 billion profit for the 2022-23 period, marking a 26% increase from the previous year. This news, while shocking to many, is not unexpected for numerous Australian households grappling with soaring mortgage rates.
During much of this fiscal year, many families enjoyed the security of fixed-rate mortgages at lower interest rates, which are now nearing their expiry. This scenario sets the stage for an even more lucrative year ahead for Westpac and its fellow major banking institutions. Following a period of modest profits and low interest rates, these banks are now poised for record-breaking earnings. The RBA's response to these developments is to downplay the significance, suggesting that banks can sustain profitability even in low-interest environments. However, for the average household, the crucial factor is the disparity between savings returns and borrowing costs.
They say the RBA is a neutral ground for the benfot of Austrlainas. But it seems to be a lie with rising interests rates on;y benenfitiing banks and increasing unemployment and homelessness.
