Mortgage lender RAMS raises standard variable interest rate

Australian Mortgage lender RAMS has been badly affected by the US credit market crisis. (AFP Photo: Greg Wood)Troubled mortgage lender RAMS says it had no other choice but to pass on another rate rise to its home loan customers.
RAMS has been badly affected by the credit market crisis which placed its funding from US capital markets in jeopardy.
Company chief executive officer Greg Kolivos says the lender has been forced to increase its standard variable interest rate for home loans.
"We've been able to hang on for as long we possibly can, but as we've found with a number of other institutions in the market place, our cost of funding has increased," he said.
"Obviously we expect to stay at higher levels than they were previously and therefore we have had to pass some of that on to consumers."
Pending shareholder approval, the company's distribution business and name will be sold to Westpac for $140 million, but it will still keep its home loan portfolio.
Federal Treasurer Peter Costello says the proposed restructure will strengthen the troubled company.
"This will give added strength to RAMS if that arrangement goes ahead, and I welcome the announcement that's been made," he said.
"It's an in principle announcement and provided all of the parties are in agreement, I think it could be a very positive step forward."
Despite the takeover news, RAMS shares took a battering and at the end of trade had slumped more than 22 per cent to 66 cents. Source: ABC