CBA standard variable home loans up 10bps

Commonwealth Bank of Australia (CBA) has hiked its standard variable interest rate (SVR) on home loans by 10 basis points.

The move on Monday follows similar rate rises by rivals ANZ Banking Group and Westpac.

CBA said it will increase its SVR on mortgages by 10 basis points on February 20, taking the SVR to 7.41 per cent.

Interest rates on six-month term deposit accounts will rise by 20 basis points on the same day, the bank said in a statement.

The rate rise for home borrowers reflect a "sustained increase" in both wholesale and deposit funding costs, CBA said.

CBA pointed to the Reserve Bank's (RBA) February statement on monetary policy which said bank funding costs have increased relative to the cash rate over the past six months.

Further increases in the spreads of term deposits, prices demanded by global bond investors in banks, and the costs of foreign exchange hedging were likely to be exacerbated given the increased uncertainty driven by Europe's debt crisis, CBA said.

The RBA's cash rate is only one factor driving the bank's total funding costs, and CBA believes local banks should continue to price their products sensibly, CBA's group executive of retail banking services Ross McEwan said.

"We need to balance the needs of all of our customers by providing competitive pricing across all products," he said.

"Whilst we understand that any increase in interest rates is not favourable to borrowers, our millions of deposit customers are favoured and since the commencement of the GFC (global financial crisis) we have seen significant competition in retail deposits pricing."

The needs of shareholders must also be balanced with those of other stakeholders, he said.

About 800,000 Australians own CBA shares, and millions more hold them through their superannuation funds, with both direct and indirect shareholders relying on CBA's returns, he added.

CBA's shares spiked 41 cents, or 0.82 per cent, to $50.29.

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