Mortgage rates could rise without the RBA

Carter explained in a statement: "We have seen the key base cost of funding, being the three-month bank bill swap rate, rise approximately 0.2 [percentage points]. This increase results in higher interest costs to our wholesale funding, as well as our retail funding portfolio, such as term deposits." Indeed, since late last year the bank bill swap rate, or BBSW, has jumped 0.25 percentage points after showing a sharp acceleration in February. The other notable thing about the BBSW is that it is the reference point used to set interest rates on most business loans, and also flows through to personal lending rates. As we see from Suncorp, the relationship is not one-to-one when it comes to personal lending. In contrast, on average today 70 per cent of Australians' net wealth is in housing. If you exclude the wealthiest 20 per cent and poorest 20 per cent, "middle Australia" has 90 per cent of their net wealth in residential property. The cost of borrowing matters because debt has been the thing that has pushed Aussie property prices up and up. Hofflin points out that it wasn't just a rates story – you needed borrowers willing to hock themselves to the hilt, and banks who were willing to lend. The big lift in bank funding costs in recent weeks is a warning that it could be the former.