The Australia Institute says the big four banks – CBA, NAB, Westpac, and ANZ – rake in an average of $228,900 in profit over the 30-year span of an average $736,000 home loan.
Last year, those banks’ profits rose to a collective $43 billion pre-tax, $16.9 billion of which was paid by owner-occupiers with a mortgage.
The Institute found that mortgages for owner-occupiers made up 22.7 per cent of the big four banks’ loans, they provided a “disproportionate” 39.3 per cent of their profits.
The banks also joined mining giants Rio Tinto and BHP as the top six most profitable companies in Australia.
Australia Institute co-chief executive Dr Richard Denniss said the figures were “obscene”.
“While so many Australians are going backwards, the banks’ profits are only going in one direction – 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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