Commonwealth Bank of Australia raises variable mortgage rates

Commonwealth Bank of Australia said today in a statement to the Australian stock exchange that the standard variable rate will increase to 5.74 % on June 15 from 5.64 % becoming the first of the country’s four biggest lenders to do so since the central bank began a record round of cuts to borrowing costs in September. Australia’s biggest mortgage lender, which previously had the lowest rate among the nation’s four largest banks, also raised business loan rates and said fixed mortgage rates will soon rise. Bank borrowing costs have climbed this year as speculation grows that the Reserve Bank of Australia will increase its benchmark lending rate as the economy strengthens. Central bank left the overnight cash rate target at a 49-year low of 3 % on June 2. Helen Kevans, an economist at JPMorgan Chase & Co. in Sydney commented: “This will be of peak concern for the Reserve Bank. We think they will probably ease policy again to prevent other banks hiking their variable rates.” There will be an increase in borrowers taking out fixed-rate mortgages “because today’s move suggests interest rates are on the rise and it’s time to lock in those fixed rates,” JPMorgan’s Kevans said. National Australia Bank Ltd., the country’s biggest by assets, has its mortgage rates under constant review, Melbourne- based spokeswoman Luisa Ford said today. And the future rates moves can be expected. Australia and New Zealand Banking Group Ltd. has no specific interest rate plans “at this stage,” with lending costs under constant review, spokesman Kevin Foley said today from Melbourne.