CBA tipped to raise home loan rates first

09/09/2010

The major banks could raise their rates by up to 20 basis points, outside of the official cycle with the Reserve Bank of Australia says new research by Credit Suisse. The Commonwealth Bank of Australia has been named as the first bank likely to move rates up because it has the highest level of share of the Australian residential mortgage market with 26 per cent. Westpac is second with 24.3 per cent.

Both are well ahead of NAB’s 13.2 per cent and ANZ’s 12.9 per cent. Credit Suisse analyst Jarrod Martin said "With a minority federal government now being formed by Labor, the major banks can now better assess the political risks associated with undertaking an out of cycle mortgage rate increase. We believe it's a prospect given the apparent funding cost and net interest margin pressures currently affecting bank core earnings growth." Mr Martin said an increase of up to 20 basis points would reflect the earnings impact of higher funding costs. The major banks have to raise $100 billion over the next year.

Source: The Australian