CBA tips mortgage rates to rise

Thursday the 13th of August, 2009 5 Comments »

Posted by Iden Money .

Commonwealth Bank of Australia’s (CBA) competitive pricing on mortgages helped it gain 21.9% of the mortgage market in 2009, but chief executive Ralph Norris has warned interest rates could rise.

“There’s no doubt we will reprice where necessary, we have to do what’s right on a commercial basis,” Norris said during the bank’s full year results briefing.“Our mortgage rates are still very competitive and we’ll see a situation where our margin position in mortgages will return to a more normalized margin.”

Iden Money director Brian Rowe said today that market indications from people as diverse as bank CEO’s to the Prime Minister were indicating that rates would rise before long. He announced that Iden’s 2 year fixed rate would rise from tomorrow, from 5.69% to 6.09%. He considered a fixed rate of 6.09% to be a good hedge against higher variable rates, particularly for borrowers paying around the average variable rate of the 4 major banks, currently 5.77%.

He said Financial Markets have already read the latest form guide and are betting on at least a 25-basis-point increase in the official cash rate before the end of the year, after reading the RBA’s quarterly monetary policy statement released last week. 90 day bank bills are currently at 3.30%. 30 basis points above the cash rate.