Interest rates are predicted to rise by 1 percentage point this year, however the majors are expected to absorb 0.3 per cent of that, a new report from Access Economics has claimed.
According to research by Access Economics' macro-economist Chris Richardson, the majors will undercut a Reserve Bank rate rise in order to claim a PR victory.
Mr Richardson said many consumers had lost faith in the majors over the last few months and so they would be looking to slash interest rates in order to rebuild borrower confidence.
But it’s important to act first, Mr Richardson said.
“The second bank to do it won’t get as much applause,” he told The Daily Telegraph.
Mr Richardson also said the banks would undercut the Reserve Bank by a further 40 basis points in 2011, savings customers with a $300,000 home loan up to $80 a month.
AMP Capital Investors chief economist Shane Oliver agreed with Richardson’s predictions and said banks would be raising rates by less than the Reserve Bank by year’s end.
If this is the case, Australian homeowners could save $150 million a month on their home loan repayments collectively.
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