Adelaide Bank lifted interest rates by 25 basis points on Monday for products across its wholesale lending program.
It is the first of the major banks to pass on the increased cost of funding to its mortgage customers.
According to Adelaide Bank’s general manager of wholesale mortgages Tim Piper, the bank had been absorbing additional costs to wholesale funding since early August and “needed to think about applying solutions for our customers and shareholders to suit current funding structures".
The increase will apply to the bank’s fully verified and low doc loans distributed via its mortgage origination channels.
Loans through the bank’s South Australian branch network will not be affected by the decision.
Despite the hike in interest rates, Piper emphasised Adelaide Bank’s 100 per cent commitment to the mortgage origination industry.
“We view our mortgage managers as partners, and have spent time educating them about the current state of the market and the decisions we’ve bad to make,” he told Mortgage Business.
While the rate rise is expected to have some impact on loan volumes for originations, Piper said the response the bank has received from its mortgage managers has been positive.
“We’ve had to make some tough decisions, but the response from our mortgage managers has been very encouraging.
“Once the market has settled Adelaide Bank and its mortgage managers will be in a good position to remain extremely competitive,” said Piper.