CBA increases home loan rates

Source: LendingCentral.com.au

All eyes are on Westpac Banking Corporation Ltd and St George Bank Ltd after the Commonwealth Bank of Australia Ltd (CBA) succumbed to the global credit crisis and lifted interest rates.
CBA, the third major bank to lift rates, has increased its standard variable rate on home loans by 0.10 per cent to 8.67 per cent, effective from January 11.
The move by CBA follows in the footsteps of Australia and New Zealand Banking Group Ltd (ANZ) and National Australia Bank Ltd (NAB), which increased their variable interest rates independent of any action by the Reserve Bank of Australia.
Westpac and St George remain the only two major banks that have not increased their standard variable home loan rates - but analysts tip it is only a matter of time.
"We believe the other majors will follow shortly with similar standard variable mortgage rate increases," Macquarie Research Equities said in a January 8 client note.
A Westpac spokesman told AAP today that "rates remain under review".
CBA chief financial officer David Craig said the bank had been exposed to additional funding costs of about $100 million since the start of the credit crisis.
"The impact of the cost of the wholesale fund is something that is impacting all Australian banks," Mr Craig said in a statement.
CBA group executive of retail banking services Ross McEwan said the "modest increase strikes a good balance between the needs of our customers and shareholders".
"We have given careful consideration to the size of this increase and while a higher increase could be justified, we believe that the current level of wholesale funding rates will moderate from the high level experienced pre-Christmas," he added.
In addition to its standard variable interest rates, CBA is also lifting its variable business loans by 0.15 per cent.
A St George spokeswoman told AAP the bank was "still monitoring the market".
AAP

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