Banks in Australia may use the next mortgage rates increase as a cover for raising interest rates, according to an analyst.
Shane Oliver, chief economist at AMP Capital Investors, said that if the Reserve Bank of Australia (RBA) implements mortgage rate increases tomorrow, many Austalian banks may be tempted to raise their own mortgage rates further.
“The banks have been talking for some time about pressure on the cost of funds with the implication that mortgage rates might have to rise over and above (any increase in) the cash rate," said Oliver in an interview with The Herald Sun.
The quarterly economic survey of 20 economists in Australia found that interest rates would likely reach 4.75 percent in December. Any interest rates increase would prompt more families to compare loans and consider refinancing, especially when housing affordable problems remain unsolved. The Herald Sun said that banks could “seize” on an official hike by pushing up mortgage rates by as much as 0.45 percent.