Banks 'may hike rates outside of RBA cycle'

Tuesday 13 July 2010

Article by Mozo

Australia’s major banks may soon increase home loan rates independently of the Reserve Bank in order to cover higher funding costs, an expert has said.

Macquarie analyst Michael Wiblin suggested that while the banks have tentatively agreed to restrict rate rises to the RBA’s official moves in recent months, they may implement new hikes following the federal election.

He told the Australian that National Australia Bank may be the first to lift rates after the election because its 7.24 per cent standard variable rate is currently the lowest of the four majors by 12 basis points.

"The sensitivity around mortgage repricing over the last six months is due to the election," commented Mr Wiblin.

Meanwhile, the newspaper observed that Australian home loan numbers rose sharply in May by 1.9 per cent, though the average loan size fell by 1.3 per cent.

Mr Wiblin’s comments may prompt more Australians to compare home loans as the interest rate environment changes later this year. Last week, research by Bankwest revealed that Australian first-home buyers now take an average of 4.5 years to save up for a 20 per cent house deposit.

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