Rumours of rate rises next week

Rumours and unconfirmed reports persist that at least one of the big four banks will move to raise standard variable mortgage rates next week. The Reserve Bank board is due to meet on Tuesday, with most pundits expecting official rates to remain unchanged at 3.0 per cent.

Regardless of what the Reserve Bank may or may not do, there is increasing speculation within banking circles that possibly Commonwealth is considering leading the majors in a round of margin expanding rate rises. A move to raise rates on standard variable mortgages by 0.10 and 0.15 per cent is expected.

Speaking outside a superannuation conference in Melbourne yesterday, finance minster Lindsay Tanner didn’t seem too fussed by the prospect of the big banks thumbing their nose the government and the RBA and again setting their own interest rates.

“While we take the view generally that banks should be doing their best to keep a lid on interest rates, we do understand the particular pressure they [the banks] are under,” said Tanner.

“You have got rollover processes taking place where money financed at a particular rate are exiting the system being replaced by money financed at a different and some cases higher interest rate now.

“Our general message to the banks is to do everything possible to keep market interest rates down because the economy is still very fragile and while we may have had some good economic news recently we are still very much in very challenging circumstances.”

Source: The Sheet