Bank chief executives have warned that 2010 will bring further rises in lending rates.
Both CBA’s chief executive Ralph Norris and ANZ’s chief executive Mike Smith have said bank lending rates will be impacted by the outcome of Australian Prudential Regulation Authority’s (APRA) proposed alteration of liquidity rules, now due by June 2011.
Mr Smith said the changes, which include enhanced disclosure and reporting requirements, are likely to force the major banks to lift standard variable rates by 18 to 20 basis points.
JP Morgan’s Stephen Walters said APRA’s legislation, which will see banks hold more capital and high quality liquid assets, will add 35 basis points to the standard variable rate.
But APRA said its proposed liquidity rules will only add five basis points.
At present, there is a 27 basis point spread between the majors.
In December, Westpac lifted its standard variable rate by 45 basis points, 20 basis points more than the Reserve Bank.
Westpac’s has grown its market share by twice the average rate over the past 12 months since acquiring St George Bank.
The bank currently holds 26.9 per cent of the market share, while CBA and its subsidiary Bankwest have 29.5 per cent of the home loan market.
ANZ and NAB have market shares of 15 per cent and 15.1 per cent respectively, according to data from APRA.
Smaller rivals, Bank of Queensland, Suncorp-Metway and Bendigo Bank have been left with 1.8 per cent, 2.9 per cent and 2.2 per cent of the mortgage market.
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