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Tuesday, 12 May 2009
Page: 3590

Mr Robert asked the Treasurer, in writing, on 10 March 2009:

What is the Government or the Reserve Bank of Australia doing to put the pressure on second tier lenders to pass on the full interest rate cuts?

Mr Swan (Treasurer) —The answer to the honourable member’s question is as follows:

The Government has made it clear that it expects all lending institutions to pass on reductions in interest rates to Australian households and businesses as quickly as possible.

The Government’s investment in up to $8 billion in residential mortgage-backed securities (RMBS) is helping smaller lenders to raise new funds and add competitive pressure to the mortgage market.

The Government’s wholesale funding and deposit guarantees have ensured that second tier ADIs have access to funding, which has allowed them to continue to lend to households and businesses, and at lower interest rates than otherwise would have been possible. This has helped maintain competition in the Australian lending markets.