If the reserve bank increases the interest rate, probably it will be a better indicator.
I don't think te financial crisis is going to end very soon. Most of the economist predicted that the global economy will take 18 months to recover. The jobless rate is still high and the consumers confidence is still low. I think the reason for CBA increasing variable rate is to cover the potential loss in the future. With the governments' first home grant, many first home buyers have got into the mortgage market, many of them wouldn't be able to afford a house without the increased governments' grant. No doubt if the jobless rate rises again, there will be a great risk that many of the first home buyers will not be able to pay their mortgage. (most of them don't have a lot of savings and won't have any equity to refinance).
To avoid a similar situation with US, Australian banks have tighten the lending criteria however it might still not enough for them to cover all te risks.
It also got lots to do with the huge Governments debt. The governments are borrowing huge amount of debts every week. the cost for bank to fund the money will be inevitably higher and higher.
No doubt the banks are being too greedy. They always try to maximise their profits to please the shareholders.
