A senior executive from one of the big four lenders has come out and said that further variable mortgage rate increases were unlikely to take place in the current round of rate adjustments by the major banks.
The executive played down the prospect of other lenders following the lead of the Commonwealth Bank, which lifted its variable rate by 10 basis points to 5.74 per cent last Friday.
The Australian reported that before last Friday, there was a 17 basis point difference between CBA, which had the lowest variable rate at 5.64 per cent, and National Australia Bank and ANZ, both pegged at 5.81 per cent.
The executive stated that the Commonwealth Bank was missing out on $200-$300 million in annual revenue given the size of its book. He further added that, that wasn't sustainable, and that they were probably writing lower-quality loans, despite tampering their lending criteria.
Commonwealth Bank cited rising wholesale funding costs and intense competition for deposits as their reason for raising their variable rate by 10 basis points.
Kevin Rudd and senior government ministers all condemned the bank by saying that Australians should be furious and that the bank's action had undermined the economy recovery.
Commonwealth Bank also lifted the price of a range of fixed-rate products and Wayne Swan accused the bank of being selfish for doing so.
Westpac increased their one-year product by 10 basis points, with the two-year loan up 20 basis points and all other terms out to 12 years up 50 basis points.
NAB followed suit moving fixed-rate loans of two-10 years' duration up in a range of 15-40 basis points.
Steven Shaw General manager of mortgages stated that the NAB had made a decision last Thursday to raise the price of their fixed-rate home loans, but that it would have no impact on any consideration of the variable rate. Mr. Shaw also stated that they had no current plans to lift their variable rate.