Mortgage holders should be preparing for their home loan interest rates to rise despite the Reserve Bank of Australia (RBA) maintaining the status quo on its cash rate.
Finsure Managing Director John Kolenda said while the RBA has kept official rates at a record low 2.0 per cent for almost a year, consumers could see major banks lifting their rates out of cycle due to cost of funding and compliance issues.
“Mortgage holders may be hit for the second time in six months by rate hikes regardless of the RBA staying on the sidelines,” Mr Kolenda said.
“We could again see banks increasing rates outside of the RBA’s deliberations. Last year variable rates rose by up to 29 basis points and investor loans by up to 49 basis points.
“There are likely to be similar increases across the board for owner occupier and investor loans in the months ahead so consumers should be preparing for that possibility.
“While the RBA also has plenty of room to cut its cash rate again, its actions are expected to be made redundant by the banks lifting their rates out of cycle.”
Mr Kolenda said banks are under pressure to comply with a regulatory increase on reserves by the end of June this year.
“The Australian Prudential Regulation Authority (APRA) wants to make our banks the safest in the world by enforcing new regularity requirements that will increase the cost of providing mortgages,” he said.
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