Glenn Stevens said on Tuesday that the central bank will take rising Australian mortgage rates into account when it sets monetary policy. The governor of the Reserve Bank of Australia also said a “neutral” level for Australian interest rates may be lower than previously forecast with widening margins between benchmark and mortgage rates.
Several major Australian banks raised mortgage rates above the recent 25bp benchmark rate rise. Kevin Rudd, Australian PM, demanded that major banks act “responsibly” after Westpac, Australia’s third largest lender, raised mortgage rates by 45bp.
There are also calls for tighter bank lending controls, as Australia heads into an election year with home ownership a key issue for voters. Investors currently expect gradual RBA hikes towards 5 per cent in 2010.
