In Sydney, St George Bank announces an increase in the variable mortgage rate. The rate will jump 20 basis points from 8.57 to 8.77. The change will be made in full by 15 January.
The bank claims that higher wholesale funding costs are driving rates up, thanks in part to the US subprime lending crisis.
According to St George Chief Financial Officer Michael Cameron, "Over the past five months we have been absorbing increased funding costs of more than 0.3 per cent per annum, and have hoped that conditions would soon return to normal and we would not have to pass these costs onto our customers. However, as this situation has continued, the bank has now changed its interest rates to take into account these increased costs."
This news does not come as a surprise as the four larger banks also increased their rates, due to the same additional cost issues they face. The Reserve Bank of Australia has also made the move to increase interest rates.
Westpac Banking Corp also increased rates early Friday morning. Rates will rise 0.15 per cent points due to the lending crisis in the US and the poor housing market slips around the globe. The National Australia Bank increased its variable rate by 0.12 percentage points. Australia & New Zealand Banking Group additionally increased the rate they charge up 0.2 percentage points.
