Speaking on Sky News's Australian Agenda yesterday, the Assistant Treasurer said the banking reform package unveiled by Wayne Swan a week ago would put downward pressure on interest rates.

But he added: "No one can guarantee that interest rates will go down, because partly they're set by the Reserve Bank of Australia and there are always plenty of factors coming into play."

The raft of reforms, designed to promote competitiveness in the sector, include bans on mortgage exit fees and a crackdown on banks signalling their rate movements.

Speaking after the reforms were announced last week, the Treasurer said the measures would "build up competition in our banking system, which will ensure that interest rates are lower over time".

Mr Shorten said yesterday "competition generally exerts a downward pressure on prices".

"What we are trying to do is put competition into the mortgage market. We are trying to improve the role of the non-four big banks, and we're also trying to improve liquidity in our market," he said.

In his weekly economic note, Mr Swan said he had encountered "broad support from the community" for the reform measures.

Read more about

Shorten hedges Swan guarantee on rates

at The Australian.