Rates to rise up to 0.35% under new rules

Banking industry regulator, APRA, proposes that banks hold more capital and high quality liquid assets, which it says will add five basis points (0.05 per cent) to standard variable rate loans.

Commonwealth Bank CEO Ralph Norris says the changes will force CBA to reduce credit availability and to pass on a standard rate rise to borrowers of between four and seven basis points. ANZ chief executive Mike Smith puts the likely standard rate hike impact at between 18 and 20 basis points.

Southern Cross Equities analyst TS Lim estimates rises between five and 10 basis points while JPMorgan's Stephen Walters estimates a 35 basis points increase. Dividend payouts to shareholders could also be reduced to pay for the higher liquidity requirements.

Source: Adelaide Advertiser