INVESTMENT BANKING | Staff Reporter, Australia

Aussie banks to be hit hard by unpredictable Fed rate hikes

Banks may have to pass higher funding costs to its mortgage holders.

According to Bloomberg, the four biggest banks there have historically gotten a bigger proportion of their funding from wholesale debt investors than peers in Europe and Japan, and the majority of that is sourced outside the local Aussie market.

Australia & New Zealand Banking Group Ltd., Commonwealth Bank of Australia, National Australia Bank Ltd. and Westpac Banking Corp. get about two-thirds of their funding from deposits and the rest from debt markets including the U.S., according to regulatory data. One way lenders could deal with higher funding costs is to pass it on to the nation’s $1.2 trillion mortgage holders, increasing expenses for borrowers in a heated property market, adds Bloomberg.

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