Consumers can expect banks to continue breaking ranks from the interest rate decisions of the Reserve Bank of Australia (RBA), according to a leading mortgage broker.

The RBA this week boosted the official cash rate by 0.25 per cent to 3.75 per cent but Westpac, the Commonwealth Bank and ANZ all hoisted their standard variable rates higher than the central bank’s increase.

Loan Market Group Chief Operating Officer Dean Rushton said the unwelcome trend of banks breaking ranks from the RBA was likely to carry on during 2010.

“Major banks no longer seem to be moving in line with the RBA, which is a development of great concern to mortgage holders,” Mr Rushton said.

“Based on this development, it is imperative that the RBA now pause and assess the impact of its three consecutive rates rises.

“The banks have effectively delivered a fourth rate rise in 2009 and this should take the impetus off the Reserve Bank to act early in 2010.”

Mr Rushton said more competition in the mortgage market would be of enormous benefit to homeowners with interest rates on the rise and he anticipates an increase in mortgage holders making enquiries about switching to smaller lenders.

He cautioned borrowers against reacting hastily and to research their options carefully.

“There is no guarantee that because a bank had only increased 0.25 per cent this time around that they would not take the opportunity to increase rates outside of the RBA in 2010,” he said.

“What we saw in late 2008 and early 2009 were banks not passing on the full interest rate reductions and the amounts held back varied at each reduction. By the end of the cycle, they were still within 0.10 per cent of each other on the standard variable rate.”

Mr Rushton said homeowners could talk to a mortgage broker to find out their options.

“They should also be able to give you some background on how that lender has historically moved their rates outside of the Reserve Bank,” he said.

“Mortgage holders also retain the right to negotiate a lower variable rate now on an existing home loan with their current lender.

“A mortgage broker can also assist you with this process and you can negotiate a home loan rate that is anything from 0.70 per cent lower or more for large size loans.”