July 04, 2008 03:29pm Article from: AAPFont size: + - Send this article: Print Email ST George Bank has lifted its standard variable home loan rate by 20 basis points to 9.67 per cent, independently of the central bank.
Australia's fifth largest bank attributed the rise to the continuing high cost of funds it sources for itself.
The rate rise equates to an increase of $10 a week for repayments on an average loan of $250,000 over 30 years.
St George chief financial officer Michael Cameron said all the banks had been absorbing a significant increase in funding costs.
The price of money has risen due to the impact of the US sub-prime lending crisis on global liquidity and wholesale funding markets since August last year.
"While we have already completed our wholesale funding requirements for this financial year, the spread between cash rates and 90 day rates in particular remains significantly higher for the industry than a year ago," he said.
St George group executive retail bank Les Matheson said that even after today's rate hike, the lender would not be "fully recovering all of our increased funding costs for this financial year".
"St George maintains its commitment that if funding costs were to reduce for a sustained period of time, we would then look to adjust our rates."
The Reserve Bank left official interest rates unchanged at a 12-year high of 7.25 per cent this week.
It had raised rates in February and March, prompting moves by the major banks to match those increases, while adding more hikes of their own.
The ANZ's standard variable rate is 9.47 per cent, the Commonwealth Bank of Australia's rate is 9.44 per cent, Westpac's rate is 9.47 per cent and the National Australia Bank's is 9.46 per cent.
St George has also increased a range of special deposit rates by an average of 50 basis points.
Days after the Reserve Bank kept the cash rate steady at 7.25%, borrowers may yet face higher lending rates from the major banks as they grapple with persistent funding costs.
Any new increases would add to the 40 basis points banks have piled on over the RBA's half percentage point hike since the beginning of 2008.
"You've seen a few quotes out there already from bank CEOs suggesting they'll be considering lifting their rates further," said Macquarie banking analyst Ben Zucker. "It all depends how much longer higher wholesale funding costs pressure continues."
"The reality is (the pressure) seems to be continuing and as a result...banks could look to move independently from the RBA," he said.
Mr Zucker said the increase this time could be in the order of 10-15 basis points.
