Major banks are looking to increase variable home loan rates regardless of any movement in official rates by the Reserve Bank of Australia (RBA), says leading mortgage broker Loan Market.
Loan Market Chief Operating Officer Dean Rushton said despite the RBA leaving the cash rate on hold at 4.5 per cent, lenders would lift their rates independent of any RBA decision and could strike soon after the August 21 federal election.
“They have clearly flagged that they are considering lifting their rates against the trend and out of cycle because their cost of funds is increasing due to the ongoing European debt crisis and the roll-over of cheaper funding,” he said.
“It is not a matter of if banks will lift their rates but when because they are not only paying more for wholesale rates but paying more on deposits, which is another key area of their funding.
“This is a development which will be of concern to mortgage holders.”
Mr Rushton said the RBA was likely to keep rates on hold when its board next meets on August 3 unless there was an alarming increase in next week’s official inflation figures.
“The major lenders could also hold off on any rate increases until after the federal poll,” he said.
“But borrowers should be prepared for rates to rise in the final quarter of 2010 because of the wholesale funding issue.”
Mr Rushton said the increase in rates this year has resulted in a 20 per cent increase in fixed rate home loan enquiries at Loan Market.
“The fixed rates market has become more competitive with several lenders reducing fixed rates in the last month but not many people are opting to switch from a variable loan at this stage,” he said.
Source: Loan Market
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