The debate about banks' interest rates is gaining momentum in Australia as a home loan broker warns borrowers that banks are more likely to increase interest rates than lower them.
The banks were also likely to hold back some or all of any future rate cuts by the Reserve Bank
of Australia (RBA).
The Commonwealth Bank of Australia has angered the Federal Government after increasing its standard variable mortgage rate, fixed rate home loans and business lending rates 10 basis points from yesterday.
Loan Market Group executive director John Kolenda says there is still a possibility the RBA could cut the official cash rate again if the economy remains in the doldrums.
"But the decision by the CBA indicates the major banks may be more likely to move rates upwards rather than downwards, or hold back some or all of future RBA cuts," he said.
The RBA cut the cash rate by 425 basis points between September and April, bringing them to a 49-year low of 3.0 per cent. RBA Governor Glenn Stevens has said there is scope to cut the cash rate further if needed.
Just under 400 basis points of the official cuts have been passed on to borrowers by the retail banks.
- AAP
