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Banks to move regardless of RBA

Regardless of what the Reserve Bank does when the Board meets later today, Australia's banks could lift their rates for the second consecutive month. Lenders are saying the costs of funds have risen by approximately 100 basis points in the past few months, which is having a huge impact.

On average, banks source approximately 30 per cent of their funds from markets that have seen costs of funds rise by 100 basis points at least. That is reason why we have seen out of cycle rate hikes and I wouldn’t be surprised to see more still as the banks look to pass on the higher costs of funds despite there huge profits.

ANZ was the first lender to move out of cycle last month, lifting the interest on its standard variable rate by 6 basis points. All of the three remaining majors then followed suit, with Westpac and CBA both lifting their standard variable rates by 10 basis points, while NAB increased its SVR by 9 basis points.

ANZ’s monthly rate meeting is set to take place again this Friday, with many industry watchers now predicting the lender will look to lift rates for the second consecutive month. If this comes to pass, it will be interesting to see whether or not the other lenders follow suit given they lifted their rates by more than ANZ last month.