Greens MP and banking spokesperson, Adam Bandt, said he will introduce legislation requiring banks to offer mortgages and small business loans that will pass on in full any Reserve Bank rate cut.
"Banks should be required to offer mortgages and small business loans that only go up and down when the Reserve Bank changes its interest rate" he said.
"By requiring the banks to pass on any Reserve Bank rate cut in full, and by capping any rise at the same amount set by the RBA, we will limit excessive profiteering and ensure Australians get a better deal."
"These products - sometimes known as 'tracker' loans - are already being offered by some banks in Australia and in other countries such as the UK. We will make every bank offer them, so that customers can choose this kind of loan if they want to be sure they'll get the benefit of any rate cut in full. If the smaller banks like Queensland QT Mutual Bank can offer tracker mortgages the big four should be able to as well."
"Competition between banks will help lower the margin between the RBA cash rate and the loan rate. Customers will still be able to choose other kinds of mortgage and loan products if they wish."
"Banks are quick to use the RBA rate to justify interest rate increases, but go slow when there is a rate cut. Despite how they behave, banks do not just exist to make a profit. They have also social obligations that should be met."
The recent Senate Inquiry into Competition within the Australian banking sector backed tracker mortgages as a way of keeping interest rates lower.