By Jacob Greber and Tim Smith
June 12 (Bloomberg) -- Commonwealth Bank of Australia raised its variable mortgage rates, the first of the country’s four biggest lenders to do so since the central bank began a record round of cuts to borrowing costs in September.
The standard variable rate will increase to 5.74 percent on June 15 from 5.64 percent, Sydney-based Commonwealth Bank said today in a statement to the Australian stock exchange. Australia’s biggest mortgage lender also raised business loan rates and said fixed mortgage rates will soon increase.
Bank borrowing costs have risen this year as speculation grows that the Reserve Bank of Australia will increase its benchmark lending rate as the economy strengthens. Commonwealth Bank put up lending costs nine days after central bank Governor Glenn Stevens left the overnight cash rate target at a 49-year low of 3 percent on June 2.
“This will be of peak concern for the Reserve Bank,” said Helen Kevans, an economist at JPMorgan Chase & Co. in Sydney. “We think they will probably ease policy again to prevent other banks hiking their variable rates.”
There will be an increase in borrowers taking out fixed rate mortgages “because today’s move suggests interest rates are on the rise and it’s time to lock in those fixed rates,” Kevans said.
Editors: Garfield Reynolds, Victoria Richards.
To contact the reporters on this story: Tim Smith in Sydney at tsmith58@bloomberg.netJacob Greber in Sydney at jgreber@bloomberg.net
Last Updated: June 11, 2009 23:07 EDT
