Home loans 'no longer linked to official cash rate'
Home loan rates are no longer entirely influenced by the official cash rate, the leader of Australia's Commonwealth Bank has claimed.
Speaking to the Herald Sun, Ian Narev suggested that banks now have far more to consider when calculating their home loan rates and this has been the case for the past decade.
He stated that banks are being forced to pay more for cash borrowed in overseas markets and are also facing higher interest payments on money held in term deposits.
The Commonwealth Bank – which is one of the country's top four institutions – angered many customers when it raised its home loan rates earlier this week. Treasurer Wayne Swan also urged people to search for cheaper deals if they are unhappy with the terms offered by their current mortgage provider.
However, Mr Narev defended the bank's actions and insisted that the official cash rate was only "one piece of the puzzle" when it comes to home loans.
"The official cash rate is only one component of our funding cost and people shouldn't expect their lending rate to go up and down in line with the official cash rate," he was reported as saying.
Have a question about home loans? Ask the money gurus at Mozo Answers.