 Rate rises to start soon?
When the chief executive of Australia's largest banks talks about interest rates, people listen. Well, this week Sir Ralph Norris, CEO of the Commonwealth Bank of Australia, said he does not expect the Big Four to raise rates more than the Reserve Bank increases to official cash rates.
The Reserve Bank is tipped to start raising rates as early as November and banks have already started increasing their rates for fixed mortgages. If the RBA does start lifting rates, home owners can be sure that their variable rates will go up also.
However, Mr Norris is confident that mortgage rates will only rise in line with official increases.
"I would be surprised if that were the case" he said, when asked whether mortgage rates would rise faster than the cash rate.
The Big Four banks in Australia - Commonwealth, ANZ, NAB and Westpac - were widely criticised when they did not pass on all of the RBA's cuts to official interest rates.
The RBA slashed the official cash rate from 7.25% to a 49-year low of 3% between September last year and April this year.
All the banks put the blame firmly on higher funding costs as their reason for not passing on the full savings to borrowers.
CBA has a standard variable rate of 5.74 per cent which is equal lowest with NAB .
ANZ Banking Group Ltd and Westpac Banking Corporation's rates are at 5.81 per cent. When the RBA slashed rates earlier this year, many banks refused to pass on all the savings to home owners, instead passing on about 80 per cent of the RBA cuts.
Mortgage rates did fall by around 400 basis points, while the official rate fell 425 basis points.
Join the discussion on Commonwealth Bank (CBA)
|