Common sense and intelligence required

Comments on Alan Wood “Why mortgages no longer rate”, 10/12/2009, http://www.theaustralian.com.au/business/opinion/why-mortgages-no-longer-rate/story-e6frg9qf-1225808812458

While it is fair enough that when banks' funding costs go up their lending rates should go up too, there are 2 problems with a simplistic interpretation of that general principle.

The first one is that why it happened after the RBA's move and not happened when their costs really went up. That is just inexplicable and stupid on the banks' part. The RBA's move can only increase their funding costs by the amount of the rise by the RBA rate. It should not increase their other costs by that action per se.

Secondly, why can't the banks make a difference between the rates for existing borrowers and new borrowers? They may pass the full rise of the official rate to existing customers, but have a higher rate for new borrowers to discourage new lending.

After all, the banks are being silly and show no strategies and tactics.

Further the nation’s politicians including PM and Treasurer are also stupid, why didn’t they point that out clearly and frankly?

It may be a case that the businessmen in a country mirror the intelligence of their pollies!