Australia and New Zealand Banking Group (ANZ) chief executive Mike Smith has warned borrowers that the banks may have to raise mortgage rates due to higher funding costs.
Speaking at the Australian British Chamber of Commerce in Sydney yesterday, Mr Smith urged the Reserve Bank of Australia (RBA) not to increase the official cash rate because banks were still battling more expensive funding costs.
“Banks will have to raise rates as their funding costs get higher. If that’s out of cycle, that’s out of cycle,” Mr Smith said.
Mr Smith said Australia needed to make sure a recovery was imminent before making any decisions about lifting the cash rate from its 49 year low of 3 per cent.
“Interest rates are low here in comparison to where they were but, internationally, they’re actually quite high. I see no need to increase rates right now,” he said.