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Major banks are likely to increase their variable home mortgage rates regardless of any movement in official rates by the Reserve Bank of Australia (RBA), Loan Market Group executive director John Kolenda has claimed.
According to Kolenda, there is evidence to suggest the banks will not pass on part or all of any future RBA rate cuts.
“They are considering lifting their rates against the trend and out of cycle because they claim their cost of funds is increasing and they are not only paying more for wholesale rates but paying more on deposits, which is another key area of their funding,” Mr Kolenda said.
Mr Kolenda said there was a strong possibility that the banks would raise variable rates above the average fixed rate of 6.39 per cent within the next three to five years.
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