Banks under pressure to increase rates

The chief of National Australia Bank, John Stewart, has warned that banks will have to increase their rates above any rise in the cash rate as the price of credit remains high. Mr Stewart said that while there was pressure on variable mortgage rates it was unlikely that they would be lifted as they are the most sensitive rates for consumers. Yesterday ANZ increased rates on its fixed loan products by 10 basis points saying that it was due to the higher cost of funding on wholesale markets. Australian banks obtain around half of their funding from wholesale markets.

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