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Banks may increase variable rates independent of RBA

by Staff Reporter7 minute read

Variable interest rates may rise by 0.15 per cent before the RBA lifts its cash rate, a new study has warned.

According to the financial comparison website RateCity, variable rates are expected to rise in the near future as the costs of funding continue to increase.

“The best indicator of what rate banks are paying to borrow their funds is the 90-day Bank Bill Swap Rate, and this has risen from 3.36 percent to 3.45 percent in the last couple of weeks alone,” RateCity’s chief executive officer Damian Smith said.

The big four banks have not moved many of their key variable rates for up to seven months, indicating the time for a rate rise is now.

“If the big four banks lift their rates, this will impact about 90 percent of Australians with a variable home loan,” Mr Smith said.

RateCity expects the current average standard variable interest rate of 5.5 percent per annum to rise to 5.65 percent before the end of the year.

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