MELBOURNE—Aussie Home Loans boss John Symond says the Reserve Bank of Australia (RBA) needs to bolster liquidity within the banking sector to spur competition and drive interest rates lower.
Mr Symond said the Government and the RBA needed to be more pro-active to ensure Australia doesn't "fall by the wayside" and needed to inject liquidity into the system amid the continuing global credit crunch.
"If the RBA and the Government allows liquidity to become rationed, banks will end up upping interest rates on bread and butter products, including home loans," he told Sky Business News.
"They won't have the competition that has been created over the last 16 years, which forced interest rates on housing to drop by about 300 basis points.
"Those interest rates will start edging up if the banks don't have competition, so liquidity needs to be put into the system to enable banks to do their normal banking transactions to keep businesses going and to keep home loans going."
Mr Symond was also critical of the RBA's last two rate rises, labelling them premature, and said he believed interest rates had "topped out" in Australia.
"I do believe that the last two interest rates (rises) may well have been premature having not taken into account fully the global fallout of the credit crunch and still not seeing the impact of the rate rises that happened before them," he said.
"They went too far too soon, in my opinion, and I believe that they should have just waited because they really hit consumers with a sledgehammer."
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