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Rising funding costs are likely to force the major banks to once again raise their home loan rates, according to an industry veteran.
John Kolenda, managing director of 1300HomeLoan, says despite the possibility of the Reserve Bank lowering the cash rate in response to the rising Australian dollar, the RBA’s actions could be negated by the big four banks raising their rates.
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“With continued global economic uncertainty, banks have recently seen their cost of funding increase, and unless that eases, they will have no choice but to pass those increases onto consumers,” Mr Kolenda said.
“These have been confusing times for borrowers with banks lifting rates outside of the RBA’s deliberations, and this looks like being the new normal going forward.
“We saw variable rates last year increased by up to 29 basis points and investor loans by up to 49 basis points. There is likely to be similar increases across the board for owner-occupier and investor loans in the months ahead.”
Mr Kolenda said the banks have also been under pressure to comply with APRA’s capital requirements by 30 June 2016, and this has been a significant contributor to their recent out-of-cycle rate rises.
“The Australian Prudential Regulation Authority wants to make our banks the safest in the world by enforcing new regularity requirements that will increase the cost of providing mortgages,” he said.
“More may follow around this issue as banks start to see the additional financial costs flow through.”
[Related: Lenders accused of offering misleading rates]
