Home loan rates could continue to trend upwards off the back of rising funding costs according to The Commonwealth Bank. The warning follows the bank’s decision to lift its standard variable rate by 10 basis points just over one week ago.
If current conditions in wholesale markets persist, the bank is likely to face extra costs equivalent to 0.6% on its variable mortgage book over the coming 18 months, Ross McEwan, CBA head of retail banking, told the Herald Sun today.
"If wholesale markets stay at current levels, then we expect it will add 10 basis points to our funding costs every quarter in some shape or form," said the head of retail banking Ross McEwan. "We will have to take a hit on our margin or pass it on to customers." McEwan said he expected that it could take about 18 months for funding pressures to ease on banks.
CBA and NAB are currently offering standard variable mortgage rates of 5.74 per cent. ANZ and Westpac rates are set at 5.81 per cent.
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