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Opposition finance spokesman Andrew Robb has defended ANZ’s rate rise, while Treasurer Wayne Swan has accused the opposition of favouring the big banks over home-buyers.
Robb was reluctant to criticise ANZ for adding by six percentage points to its loan rates on Friday.
"What, do you want them to have a loss before they can put up their margins?" Robb said ABC Radio today when asked if the ANZ decision was justified.
"You know they're not stupid, and I don't think they would willy-nilly put up their margin like this if they weren't suffering a problem with their margins."
The ANZ said it needed to lift lending rates because of the rising costs of international wholesale funding and domestic deposit competition.
The opposition has blamed the rate increase on high government spending.
But Swan says families and business will be rightly upset with Robb for defending the ANZ’s move.
"Andrew Robb is out there going in to bat for a huge bank over struggling families," Swan told AAP.
The treasurer said Robb was a part of the Howard government which presided over 10 consecutive interest rate rises.
"It's no wonder he has no idea of what rate rises mean for families and small businesses," Swan said.
ANZ CEO Michael Smith was in Hong Kong last month trying to convince international wholesale lenders that Australian house prices were not at dangerous levels, in order to source cheaper funding.
Wholesale funding costs rose from 139 basis points to 149 in just a few days last week as Spain’s government debt problems unsettled financial markets.