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Banks start to move interest rates

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  • Banks start to move interest rates

    Hi all,

    news for today...

    Although the Reserve Bank left interest rates unchanged last week, but the banks have started to hike their floating rates.

    The Reserve Bank may have stayed its hand last week, leaving its Official Cash Rate (OCR) unchanged at 5%, but wholesale interest rate markets have had other ideas and already lenders are responding by raising their floating mortgage rates.

    Westpac led the way back on 11 November in what one observer calls a "risky" move.

    With 90-day bank bills, from which the banks finance their floating rates, topping 5.4% back then, Westpac raised its floating rate from 7.1% to 7.25%. As a rule of thumb, banks try to keep their floating rates between 1.75 and 2 percentage points above the 90-day bank bill rate to preserve their profit margins.

    All the other lenders sat on their hands until they knew the central bank’s decision last week.

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    Best Regards

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