National Australia Bank boss Andrew Thorburn expects interests rates will start to rise over the next year or two but probably slowly.
NAB and the other big banks have yet to say if they will follow Westpac, which is lifting its variable home loan rates by 0.14 percentage points due to increased wholesale funding costs.
Mr Thorburn said there was no doubt the banks’ short-term funding costs had risen.
“Our commitment is we’re going to be competitive across the board,” he told 3AW on Friday.
“We constantly are looking at all our deposit rates and all our lending rates partly because, we like all the Australian banks, fund a lot of the funding of the Australian economy from offshore borrowing.
“That’s moving around all the time so you need to have it under constant dynamic review.”
He added Australia had been in a very low-rate environment for a long time “so I think the outlook in the next year or two, most people would expect rates would start to rise but probably slowly”.
On Friday, Suncorp announced it would increase interest rates, also citing an increase in funding costs.
The changes will see all variable rate home loans increase 0.17 per cent per annum and small business loans increase 0.10 per cent per annum.
Suncorp Banking & Wealth CEO David Carter said the move was needed as the bank had been absorbing the increase in cost driven by demand for high interest savings products.
“We acknowledge that any increase to rates will impact our home loan customers’ cost of living, however our savings customers, many of whom are retirees, have been supported by favourable deposit rates over recent months,” Mr Carter said in a statement on Friday.