Pressure builds on mortgage rates

Borrowers could face further rate increases outside of any official rates rises with key funding costs continuing to rise. The three month bank bill swap rate, considered a key factor by the banks when setting mortgage rates, has risen to 7.81 per cent from 7.18 per cent at the beginning of this year. The situation is expected to get worse with competition for funds increasing and investors becoming less likely to buy into banks and other financial institutions. The ANZ Bank's chief financial officer, Peter Marriott, said that any future action on rates would be very dependent on what happens with the 90 day bank bill swap rate over the next couple of months.

Source: The Australian Financial Review