Banks say rates are going up

Westpac managing director Gail Kelly predicted a further rise in the bank’s costs of funds, driven by pricing in offshore debt markets, at between 30 and 40 basis points from current levels. The comments have added weight to speculation that banks may raise interest rates on retail loans by more than the Reserve Bank’s guidance.

Kelly also warned that further rate rises on home mortgages to recover the costs would be ”difficult” during an election year. Commonwealth Bank funding executive Lyn Cobley said the cost of funding for banks would remain high for the next two years.

Source: The Age