top of page
Search

Big Banks to Hike Rates after Election

Our recent analysis of the big banks reveals a high probability of lifting their mortgage rates as a result of rising cost of funds and compliance issues, despite predictions from some economists of further easing of monetary policy the Reserve Bank.


We are not surprised that the RBA kept its cash rate at the record low of 1.75 per cent yesterday, after the 25 basis points reduction in May. The RBA could lower official rates again at its next meeting on 5 July, three days after the federal election.


However, further rate cuts by the RBA could be negated by the big banks lifting their home loan interest rates out of cycle due to cost of funding and compliance issues. The big banks have been waiting until the election is out of the way before making any moves independently of the RBA.


They want to lift rates in response to rising funding costs and the additional costs they face for the extra compliance and regulatory increase on reserves they will have to have in place by the end of June.


The recent attention from both sides of politics and the federal opposition pledge to hold a royal commission into Australia’s banking system has also tied the banks’ hands on rates until after the election.


While the RBA has room to cut its cash rate further due to the sluggish economy and subdued consumer & confidence, any future reduction is likely to be negated. Banks will look to increase their rates at the next opportunity. From where we see the situation, the best defence of paying higher home loan rates is being with a smaller boutique lender that is not facing these same financial pressures.

Comments


© 2023 by Heart Financial Advisers. Powered and secured by Wix | Financial Services Guide (FSG) | Privacy Policy 

  • Twitter
  • LinkedIn
  • Facebook

Stu Varidel AR 324007 and Your Choice Financial Planning Pty Ltd ABN 80124246877 trading as Heart Financial Advisers CAR 323623 are authorised representatives of Sentry Financial Services Pty Ltd ABN 30 113 531 034 & AFSL 286786.

Warning The information provided on this website has been provided as general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of your Adviser before you make any decision regarding any products mentioned in this communication. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither Heart Financial Advisers and Heart Mortgage Services nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.

bottom of page