Major banks match rate rise

The major banks matched the Reserve Bank of Australia's official rate rise of 25 basis points yesterday, but more hikes could be store for homeowners as they threaten to push rates up further.

While Treasurer Wayne Swan stated that banks would not have "any justification for increasing their mortgage rates over and above the increase in the cash rate delivered by the Reserve Bank", many have stated that the high cost of wholesale funding is forcing their hand.

"The spreads (on wholesale funding) are coming in, but they are still at incredibly high levels [compared to pre-GFC]," explained Lyn Cobley, CBA group treasurer in a presentation last week.

She added that as a result, when cheaper wholesale funding is rolled over, the bank will have to replace it with more expensive funding, pushing up the costs of both its fixed rate and variable rate mortgages.