Making headlines today, The Australian Financial Review has reported that Westpac chief Gail Kelly has warned that home loan rates will have to rise further, in line with increased funding costs.
Speaking at a business forum in Sydney yesterday, Ms Kelly said interest rates on mortgages would have to rise to offset “materially” higher funding costs, the paper reported.
According to the AFR Ms Kelly said there was a particular view of what has occurred with funding costs and it is "very clear to all of us" that funding costs have gone up materially as a direct result of the global financial crisis.
Ms Kelly also acknowledged that the government was at odds with the banks over whether they needed to raise mortgage rates by more than the Reserve Bank’s official changes.
According to the daily, Ms Kelly said the cost of funding had increased as a result of the global financial crisis, and would continue to increase over the coming 18 months.
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