Macquarie Group, Australia’s biggest investment bank, increased its home loan rates despite the fact that the Reserve Bank of Australia kept the official rate unchanged last week, Reuters reported.
This announcement came in response to rising funding costs and there is a possibility for other larger banks, including the big four, to follow suit.
Macquarie said that it was hiking mortgage rates by 6-10 basis points on Tuesday, but did not disclose the reason behind the move.
“We’re going to see the higher funding costs get eventually passed through by the major retail banks, which will further squeeze household in terms of their outlook for consumption,” said Kerry Craig, Global Market Strategist, J.P. Morgan Asset Management. “Do we see out-of-cycle rate hikes coming through from other banks in Australia? Yes, probably.”
According to Australian Financial Review, Dutch lender ING Groep NV and smaller Australian-listed lender Homeloans had both raised rates.
Meanwhile, Westpac, the country’s no. 2 lender by market value, chose not to comment on its rates due to legal reasons.
Top lender Commonwealth Bank of Australia, together with the third and fourth-biggest lenders Australia and New Zealand Banking Group and National Australia Bank, have yet to make statements regarding rates.
It is important to note that rate hikes by major lenders would put pressure on a housing market that is currently slumping in the face of tighter regulations. They could also trigger community outrage, similar to what has happened amid the public inquiry into finance sector misconduct in Australia.