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Home loan rates could continue to trend upwards off the back of rising funding costs according to The Commonwealth Bank.
The warning follows the bank’s decision to lift its standard variable rate by 10 basis points just over one week ago.
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If current conditions in wholesale markets persist, the bank is likely to face extra costs equivalent to 0.6 per cent on its variable mortgage book over the coming 18 months, Ross McEwan, CBA head of retail banking, told the Herald Sun today.
"If wholesale markets stay at current levels then we expect it will add 10 basis points to our funding costs every quarter in some shape or form," he said.
"We will have to take a hit on our margin or pass it on to customers."
Mr McEwan said that relatively cheap medium and long-term funding raised before 2007 was now maturing and had to be replaced by new programs on higher spreads.
