Editor's note

Conventional political wisdom says you should never order an inquiry unless you know what it is going to find, and it would be tempting to think that the Australian Competition and Consumer Commission (ACCC) has found everything it ever will about mortgage rates.

At the request of the then treasurer, Scott Morrison, it produced an 80-page report on mortgage interest rates just last November. But that report was notable for what it didn’t find. The banks used “opaque pricing” and media releases announcing interest rate changes by banks didn’t “always tell the full story”.

The inquiry announced by Treasurer Josh Frydenberg on Monday will be conducted under Part VIIA of the Competition and Consumer Act, meaning the ACCC will be able to use compulsory information-gathering powers it couldn’t use last time.

Mark Humphery-Jenner writes this morning that while the banks’ overall profitability and net interest margins are public knowledge, the profitability and margins on mortgages are not. Nor does anyone outside the banks have much of an idea about the extent to which they charge different customers different prices for the same product.

It’s not at all certain that the 11-month inquiry will find the banks have done anything wrong. What it should find is what goes on under the hood, enabling us to better understand whether they are profiteering when they don’t pass on Reserve Bank interest rate cuts.

No-one outside of the banks, including the treasurer, is too sure.

Speaking of mortgages, this morning María Yanotti and Danika Wright outline new research that finds that an astounding two-thirds of property investors buy rental properties in the suburbs in which they live. It means they are putting all their property eggs in one basket. As the authors ask, how likely is it that the location in which you happen to live will outperform every other location?

Oh, and the Nobel Prize for Economics was announced overnight.. One of the winners is a woman, only the second in the 50-year history of the prize. At age 47, Esther Duflo is the yongest ever recipient of the prize. Arnab Bhattacharjee and Mark Schaffer say that alone is important, as is her work on finding practical ways to alleviate global poverty.

Peter Martin

Section Editor, Business and Economy

Top stories
The banks haven’t provided the Commission with as much information as it would like. DAVID MARIUZ/AAP

Four questions about mortgages the ACCC inquiry should put to the big four banks

Mark Humphery-Jenner, UNSW

The ACCC has inquired into mortgage rates before. This time will want detail.
How likely is it that where you happen to live will always outperform every other location? Shutterstock

Location, location, location: why up to two-thirds of property investors may get it wrong

María Yanotti, University of Tasmania; Danika Wright, University of Sydney

Investing where you've last invested isn't bright. new research finds that two thirds of property investors do.
The Australian Federation of Islamic Councils says the bill doesn’t go far enough to protect religious minorities in an increasingly intolerant society. Dan Himbrechts/AAP

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Erin Wilson, University of Groningen

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Fat activists argue fat is the most appropriate word to describe their bodies. Yulia Grigoryeva/Shutterstock

Changing the terminology to ‘people with obesity’ won’t reduce stigma against fat people

Cat Pausé, Massey University

The British Psychological Society is calling for a language change, from 'obese people' to 'people living with obesity'. But using the word obesity can reinforce rather than prevent stigma.

Business + Economy

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