Out-of-cycle rate hikes could hit in latter half of 2016
Another potential cash rate cut may not stave off rate hikes by Australian banks.
The head of a mortgage broking network has claimed home loan customers should “be bracing” for rate hikes by the major banks in the latter half of 2016. 1300HomeLoan managing director John Kolenda said banks are likely to deal out-of-cycle hikes in spite of a mooted cash rate cut by the Reserve Bank.
“Major lenders have been assessing options to reprice but have delayed making any moves due to the attention put on them by both political parties and awaiting the outcome of the federal election,” Kolenda said.
Kolenda argued banks would feel the need to lift rates in response to rising funding and compliance costs. Banks have also faced new capital requirements that came into effect at the end of June.
“Banks will be eyeing repricing opportunities and look to lift rates out of cycle sometime in the second half of this year now the election is out of the way,” he said.
While NAB recently dealt cuts to fixed rate loans, Kolenda argued that “the conditions for rate hikes remain”. He said fierce competition had seen banks' margins compressed. He had previously predicted banks would begin to hike rates following the Federal Election.