Home loan rates 'to increase'

Home loan rates are set to increase as Australia’s largest financial institutes have announced they will match the central bank’s interest rate rise.

The news might mean that people find they end up paying more on their low interest home loans.

ANZ, the Commonwealth, the National Australia Bank and Westpac – which collectively control around 85 per cent of the mortgage market – have each announced they will apply the 25 basis point growth to home loan rates.

Commenting on the decision, Graham Hedges, ANZ chief executive for Australia, explained that the average cost of wholesale funding is increasing.

Because this is putting growing pressure on mortgage markets, there is more commercial pressure to pass the extra costs onto the consumer, he added.

"Right now, it’s in everyone’s interest that the recovery consolidates and the right thing to do at this point in the economic cycle is for us to absorb the additional funding costs," Mr Hedges stated.

ANZ provides mortgages, credit cards, finance and banking to those in Australia, New Zealand and the Asia Pacific.

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