July 10, 2018 / 4:21 AM / 10 days ago

Australia's Macquarie hikes home loan rate, 'big four' eyed

SYDNEY, July 10 (Reuters) - Australia’s biggest investment bank Macquarie Group Ltd hiked home loan rates even as the country’s official rate remains steady, in a sign funding costs were rising and larger rivals such as the “big four” retail banks could follow suit.

Rate hikes by top lenders would pressure the housing market that is already in retreat on a series of tighter regulations, and fuel a sense of community outrage that has taken flight amid a public inquiry into finance sector misconduct in Australia.

Macquarie on Tuesday said on its website that it was raising mortgage rates by 6-10 basis points, but did not provide an explanation for the move that comes a week after the Reserve bank of Australia kept rates on hold at its monthly meeting. Rates have been at a record low since August 2016.

“We’re going to see the higher funding costs get eventually passed through by the major retail banks, which will further squeeze household in terms of their outlook for consumption,” said Kerry Craig, Global Market Strategist, J.P. Morgan Asset Management. “Do we see out-of-cycle rate hikes coming through from other banks in Australia? Yes, probably.”

The Australian Financial Review reported that Dutch lender ING Groep NV and smaller Australian-listed lender Australian-listed Homeloans Ltd had both raised rates. Neither were immediately available for comment.

Westpac, Australia’s No. 2 lender by market value, declined to comment on its rates, citing legal reasons.

Spokespeople from top lender Commonwealth Bank of Australia , and the third and fourth-biggest lenders, Australia and New Zealand Banking Group and National Australia Bank Ltd, were not immediately available for comment.

Short-term funding cost market indicators have more than tripled since August 2017 while funding through deposits and long-term wholesale funding costs have also increased marginally in recent weeks. (Reporting by Byron Kaye in Sydney, additional reporting by Swati Pandey; Editing by Himani Sarkar)

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