Two rate rises by Xmas are possible: CBA

SYDNEY (AAP) - Commonwealth Bank of Australia (CBA) expects to pass on up to two more official interest rate rises to borrowers in 2011.
Australia's biggest mortgage lender has also played down its rising mortgage delinquencies during the March quarter.
CBA believes the Reserve Bank of Australia (RBA) will raise the overnight cash rate (OCR) at least once from its current 4.75 per cent over the next six months.
Chief executive Ralph Norris says any rises will be passed on to borrowers.
"We would look at the situation as and when increases come through in the OCR, but certainly at this point we would expect in the normal course of events that would be passed through," he told analysts and reporters.
Any rate rises for CBA's customers may drive a further deterioration in 30, 60 and 90-day mortgage arrears, which ticked up slightly during the March quarter.
CBA did not quantify the increase in arrears, but Credit Suisse estimates put the 90-day March quarter number at 0.74 per cent of the bank's home loan portfolio, and 0.3 per cent of its business loan portfolio.
Like ANZ Banking Group and Westpac Banking Corporation, CBA attributed the rise to seasonal factors, the Queensland floods and Christchurch's earthquake.
The bank insists its credit quality remains "very sound", even though arrears are now as high as in 2009.
"I don't think it's ... systemic," Mr Norris said.
Seasoning effects on CBA's large 2008 vintage of home loans was another major driver of higher arrears, which occurred across both first home and repeat buyers.
Stress on home loan portfolios typically peak two years after loans are taken out and the 2008 vintage was no exception, chief risk officer Alden Toevs says.
But loss rates on the vintage were "very modest", he said.
However, just in case bad debts materialise, CBA has retained its $1.2 billion economic overlay provision to cover the cost.
"At this stage we want to maintain our fortress balance sheet," chief financial officer David Craig said.
Like Westpac, CBA saw its three-month annualised growth rate for mortgages drop sharply in 2010.
Since then, both banks have fought rival National Australia Bank over market share, and Mr Norris said loan applications volumes were expected to rise in May and June.