Banks tipped to risk rate-rise mauling

THE three remaining big banks are expected to soon hike their rates above last week's RBA's official cash rate rise.

A stand-off between the Australian banks over mortgage rates has emerged for the first time in nearly two decades / File

A STAND-OFF between the Australian banks over mortgage rates has emerged for the first time in nearly two decades.

But speculation is intensifying that the three remaining majors will move above the Reserve Bank's official cash rate rise last week, The Australian reports.

The National Australia Bank, ANZ and Westpac have yet to follow the Commonwealth Bank, which was the first major bank to hike its lending rates, less than two hours after RBA outcome was announced last Tuesday.

The CBA's decision to increase rates by 45 basis points - almost double the official move - has created intense political and consumer scrutiny of the banks that many industry observers believe has prompted the remaining banks to hold fire.

Banking sources said yesterday the current stand-off was the longest time in which the banks had not followed the RBA in moving mortgage rates since the mid-1990s.

At that time, the banks were under fire for closing branches and cutting jobs, and tried to win customer and political favour by not moving rates instantly or not passing on all of the official rate hikes.

But it is becoming increasingly likely that NAB, ANZ and Westpac will increase their rates above the RBA's increase, despite the savage reaction towards CBA's action.

Despite the majors' stand-off, the majority of small bank and non-bank lenders have raised their mortgage and key lending rates in the past week.

Analysis by RatesCity found that most of the smaller lenders had capped rates rises to the RBA's 25-basis point move.

The CBA has the highest standard variable rate at 7.81 per cent compared with those which have not been increased - Westpac's 7.51 per cent, ANZ's 7.41 per cent and NAB's 7.24 per cent.

Read more about rate rises at The Australian.