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Big four to raise rates above RBA

12 October 2009 Reporter

Higher funding costs may force the big four banks to increase their rates beyond the official cash rate.

According to a report in The Sunday Telegraph, the National Australia Bank (NAB) revealed that the costs of short term funding will increase by between 0.10 add 0.20 over the next six months, which, if passed on in full, would add up to $40 a month on the typical $300,000 mortgage – on top of the RBA rate rises.

Over the weekend, Westpac’s retail and business banking group executive Peter Hanlon  also confirmed that lending rates could outpace rises in the official rate due to increased funding costs.

"The pressure on every single one of those (RBA) decisions is for us to actually increase rates by a higher amount,'' he told the Telegraph.

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"Any (mortgage) interest rate increases will be based not on what the RBA does but on how our funding costs are going.''

Big four to raise rates above RBA
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