ANZ chief contemplates raising rates

ANZ chief executive Mike Smith said yesterday that banks would have to raise rates soon because there is a “mismatch” between home loan rates and deposit rates, which had blown out in relative terms since the onset of the global financial crisis. “We are paying 160 basis points (1.6 percentage points) more on deposits than we were pre-crisis and in mortgages we are only up about 100 basis points,” he said. “So something has to give at some stage.”

Mr Smith told a business lunch yesterday that “You never say never. We have to watch the situation and we continue to do that,” he said, adding that funding costs would “absolutely not” ease back to pre-crisis levels. “We just continue to monitor the situation and we have to remain competitive.”

Source: Herald Sun

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