The sub-prime mortgage shakeout was not over, with further losses expected to be revealed at the end of this month, says the head of Australia's biggest bank.
National Australia Bank chief executive officer John Stewart said it was difficult to know where the losses were among the money
lenders.
"We don't know where the losses are and some won't come out until companies report, which will probably be the quarter end (September)," Mr Stewart told the Nine Network.
He said there were about 250 billion adjustable rate mortgages, or ARMS, in the United States that had not come to their reset rate yet.
"We know this will last for some time," Mr Stewart said.
Whether mortgage rates would rise in Australia depended on the money markets, he said.
"Banks have had to pay more for the money that we borrow.
"Right now, the banks and the big banks are doing exactly the right thing by the customers and the economy," he said.
"There are other ways we can make margins on this, we will try to do the right thing around our customers."
He said some businesses would have their models challenged, with the price of short-term money not as profitable as before.
"If the market settles, then it would be a smaller number that is passed on to borrowers," he said.
"Ultimately, it will be passed on to borrowers, let's hope it is a very small number."
Earlier this month, Mr Stewart said it would not be such a bad thing if a few non-bank lenders, crippled by higher funding costs, were forced to exit the market, and reiterated that the US sub-prime mortgage crisis caused by people with poor credit histories defaulting on their loans would have little impact on Australia's economy.
But he said it could force banks to raise rates.
- AAP
