By: Jessica Darnbrough
ING DIRECT has followed the majors in lifting its standard variable mortgage rate by 25 basis points.
The rate hike follows a 30 basis point rate increase last month.
Rising funding costs prompted the non-major to move outside of the RBA’s 0.25 per cent lift last month.
ING DIRECT’s head of treasury Glenn Baker told The Adviser last month that the overall cost of funding continues to rise on the back of portfolio re-pricing.
Older, cheaper funding has matured over time and is being replaced by new funding at a higher cost – this is most evident in the area of longer term wholesale debt issues.
Mr Baker said the overall costs of funding would continue to climb until cheaper funding, than that which was acquired during the financial crisis, started to positively affect portfolio pricing.
“However, this is unlikely to happen over the next 12 months,” Mr Baker said.
“Since the global credit crisis second tier banks are paying relatively more for funding than the big four and the longer term trend is for this imbalance to continue.”
Effective from 7 May, the rate on ING DIRECT’s most popular product, the Mortgage Simplifier, will increase to 6.47 per cent.
Existing residential variable rate customers will receive a letter advising them of the rate change in late May 2010.