Despite the Reserve Bank of Australia (RBA) holding the cash rate for 23 months in a row, banks are under increasing pressure to move interest rates as more lenders make changes in response to increased costs.
Over the last week ten institutions have changed their interest rates to home loan products, with a total of 53 product level changes recorded.
Steve Mickenbecker, group executive, financial services, at Canstar said, “With LIBOR and BBSW up 40 basis points in a month, it’s not surprising that we are seeing rate increases. The cost of wholesale funding is rising, which ultimately has to find its way through to home loan rates.”
LIBOR = London Interbank Offered Rate and is a benchmark rate that some of the world’s leading banks charge each other for short-term loans.
BBSW = Bank Bill Swap Rate and is a short-term interest rate used as a benchmark for the pricing of Australian dollar derivatives and securities, most notably floating rate bonds.