Australian lenders are fighting back against criticism that their lending rates may be increased beyond the scope of the official rise in interest rates undertaken by the Reserve Bank of Australia, which could take place as early as next week.

The central bank issued a statement which said that lenders in Australia over the last couple of years had made enough profits to be able to absorb the increased cost of funding which resulted from the global financial crisis.

The statement was largely viewed as a warning to lenders not to increase their standard variable mortgage rates beyond the RBA’s next rate increase. Mark Joiner, chief financial officer of NAB said that lenders continued to face funding cost pressure, despite the central bank’s warning that there was no need for banks to pursue independent rate hikes.

“I don’t think this really has been worked through by the Treasury or the RBA as to what the cost (to banks) is yet,” Mr Joiner said.

Mr. Joiner added that the war for deposits had begun to ease which has had the effect of relieving some of the pressure. Mr. Joiner did point out that margin pressure from international sourced funding remained.

Steven Munchenberg chief executive of the Australian Bankers Association says that official interest rates were just one factor banks take into account when setting their own variable interest rates.

“Thirty cents in every dollar lent by Australia’s major banks has to be raised from overseas investors,” he said. “The cost of that money has remained high and volatile and is not controlled by the Reserve Bank. Banks have a responsibility to look after their customers and banks tell me that individual pricing decisions made on interest rates are not made lightly.”

The consensus expectation is that lenders will raise their interest rates by at least 15 basis points above the official rates hike. Such a rise would mean Australian mortgage rates would stand at close to 8 per cent.