Homeowners are likely to be hit by another out-of-cycle rate hike as banks pass on higher funding costs.
The official interest rate remains at a record low but market watchers expect the major banks will hike variable mortgage rates this year regardless of any Reserve Bank of Australia action.
"It's a very strong possibility that we'll see more out-of-cycle rate hikes this year as lenders address funding cost pressures," comparison site Mozo.com.au director Kirsty Lamont told AAP.
The major banks lifted variable mortgage rates in November to offset costs linked to new requirements to hold more capital against home lending to absorb possible losses.
Ms Lamont said the capital adequacy requirements continued to flow through the system, causing funding cost pressures, while some lenders were also reporting increases in wholesale funding costs.
Mortgage broker 1300HomeLoan managing director John Kolenda said it is highly likely the banks will hike rates this quarter, before the capital requirement change comes into effect on July 1.
"With the additional cost of funding, they won't have any choice but to pass that cost on," he said.
The RBA kept the cash rate on hold at two per cent on Tuesday but has warned the soaring Australian dollar could threaten the non-mining economy's recovery.
Mr Kolenda said the RBA is likely to lower the cash rate this quarter but the central bank's actions could be made redundant by the major lenders lifting their rates out of cycle.
Ms Lamont expects a RBA cut at some stage within the next six months, but warns borrowers may not see the benefit of any reduction.
"If the RBA cuts rates before lenders have adjusted rates themselves then it's likely that lenders might hold back some or all of any cut that the RBA passes through."
Mr Kolenda said the coming hike in variable mortgage rates could be in the order of 15-30 basis points, after a rise of up to 29 basis points last year, and an increase of up to 49 basis points for investor loans.
Ms Lamont said borrowers should consider fixing part or all of their home loan as the gap between fixed and variable rates has widened over the last few months, to the point where average fixed rates across all terms are now lower than average variable rates.

12 basis points

Sir lastnail wrote on Apr 7^th, 2016 at 12:53pm:



Wow 12 basis points - 0.12%. How will they cope? 4.6 to 4.72%. Remember 17%?

“Around 30% of the top end eastern Sydney market are Chinese buyers. Five or six years ago it was significantly less, around 5%. Other than that it’s locals that have done well in business or mining, doctors and other professionals.