CBA warns of rate hike

The Commonwealth Bank of Australia’s (CBA) chief executive Ralph Norris has warned home owners that interest rates will rise in the near future.

Mr Norris made the comments yesterday while announcing the company’s full year results.

CBA’s underlying net interest margin rose by 0.08 percentage points to 2.10 percentage points over the year to June.

That was driven by higher business and personal lending rates as well as a hedging portfolio that it uses as an insurance policy during a low interest rate environment.

Mr Noris said that while CBA had been forced to raise their rates in recent months due to increased funding costs, the bank’s mortgage rates were still competitive.

“We’ll see a situation where our margin position in mortgages will return to a more normalised margin,” he said.

The bank has grown its home loan share 2.6 per cent in the year to June, taking it to a total of 21.9 per cent, or nearly a quarter of the market share including Bankwest.