Westpac 'may keep raising rates'

Wednesday 24 March 2010

Article by Mozo

Westpac’s strong position in the home loan market could mean it will continue to raise rates by more than the Reserve Bank of Australia (RBA), it has been suggested.

Richard Gluyas, a finance columnist for the Australian, noted that Westpac’s gross lending has grown at almost double the rate of the banking system. This has been driven by its home-lending book, which has expanding at 1.5 times the system, he said.

Mr Gluyas referred to recent comments by BBY analyst George Gabriel who claimed that Westpac’s strong growth had encouraged the bank to implement its unpopular 45 basis-point rate rise in December after the RBA had moved by only 25 basis points.

He said that other major banks were in a similarly strong position, with Commonwealth Bank beating system home loan growth by 1.7 times while NAB could boast growth of 0.76 times the system.

The comments may serve as encouragement to Aussies who wish to compare home loans in search of the best deals – particularly after Westpac chairman Ted Evans said this week that borrowers should get used to rising interest rates for several years, including increases ahead of the RBA rises.

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