Commonwealth could be first to lift home loan rates

Thursday 09 September 2010

Article by Mozo

The Commonwealth Bank (CBA) is likely to become the first to hike home loan rates above the Reserve Bank cycle, it has been claimed.

Peter Taylor of the Herald Sun observed that the threat of out-of-cycle rate rises is much greater now that the federal parliamentary deadlock has been resolved.

Commenting on prevailing industry opinion, he said: "With the Reserve Bank unlikely to increase the official cash rate until at least November, the banks will look to independently address the impact of the growing funding costs eroding their profit margins."

Indeed, Mr Taylor referred to a recent note to investors by Credit Suisse which argued that CBA is "the most natural price leader" that will be expected to prompt and facilitate industry-wide mortgage rate increases.

Aussie home buyers may come under greater pressure to compare home loans should the banks begin rising rates. Last month, CBA chief Ralph Norris conceded that the bank "may well have to" pass on rising costs to customers.

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