Savings account shift puts pressure on CBA

The Commonwealth Bank (CBA) may be forced to implement out-of-cycle mortgage rate rises because of changes to customers' savings patterns, it has been suggested.

David Symons of the Sydney Morning Herald noted that while the Reserve Bank's decision to keep the official rate on hold this week was a temporary reprieve for borrowers, there is mounting speculation that various banks will be forced to make the own above-cycle interest rate moves.

Indeed, he referred to recent statements regarding CBA's need to enforce such independent hikes if profit margins are to be maintained.

Mr Symons observed that this is partly down to the fact that more customers are choosing to compare savings accounts and switch to better term deposit options.

"CBA has stated that funding costs are rising by almost two basis points a month; not least due to the migration of bank deposits from low-interest savings accounts to expensive term deposits," he stated. "Competition for term deposits has seen interest rates rise as high as 6.3 per cent."

However, Mr Symons argued that the banks could face a regulatory backlash to any out-of-cycle mortgage rate increases given that the government is targeting a number of banking reforms including lower transaction account fees and home loan pricing constraints.

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