Australia’s major banks will look to hike their interest rates even if the Reserve Bank of Australia (RBA) doesn’t increase the official cash rate, Loan Market Group’s chief operating officer Dean Rushton has said.
According to Mr Rushton, lenders will lift their rates independent of any RBA rate hike and could strike soon after the August 21 federal election.
This will result in increased mortgage repayments for borrowers with variable rate mortgages.
“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.