Why do banks raise interest rates when the RBA doesn’t?

Some of the reasoning driving bank rate rises

Home buyers and property investors are often perplexed by the decision of banks to raise interest rates while the Reserve Bank of Australia (RBA) cash rate remains stable. 

The traditional justification by banks for increasing interest rates, when the official RBA cash rate hasn't moved, is that their own borrowing has become more expensive including the rate paid on our deposits and increases in offshore borrowing. These additional costs are then passed onto customers.

Australia’s major banks have also expressed concern over rising funding costs as a direct result of the federal government’s recent levy, warning that customer lending costs may increase as a direct result.

Home loan rates are still at record low levels. How does your loan measure up against current market offerings? With further talk of rate increases from major banks as well as a potential RBA increase down the track, perhaps now is the time to review and reset your home loan or even consider fixing your interest rate at the current record low levels.