The major banks will hike home loan interest rates in the second half of 2016, despite prospects of another cash rate cut by the Reserve Bank of Australia (RBA
), the head of a large broker network has argued.
1300HomeLoan managing director, John Kolenda, said the major banks are free to make their move now that the long running federal election is out of the way.
“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,” he said.
The major banks are likely to blame the rate hikes on margin compression from fierce competition, cost of funding, and compliance issues, according to Kolenda.
“The banks need to lift rates in response to rising funding costs and the additional costs they face for the extra compliance and regulatory increase on reserves they had to have in place by the end of June this year,” Kolenda said.
“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.”