While the funding squeeze on wholesale money markets has forced non-bank lenders to lift their prices, banks, with their large deposit bases, have been keeping prices low in an attempt to steal customers.
Figures from the Australian Bureau of Statistics show the strategy has paid off, with the market share of banks, by value of loans extended, rising to 84.9 per cent in October, the highest in seven years.
As banks continue to hold regular weekly internal meetings to set their standard variable mortgage rates - which so far have remained unaffected by the credit squeeze - some economists think a move before Christmas is likely.
The chief economist at Deutsche Bank, Tony Meer, said banks were likely to put rates up by between 10 to 15 percentage points above the official rise in interest rates last month.
An economist at JP Morgan, Helen Kevans, is tipping a rise of between 10 to 25 percentage points above movements by the Reserve Bank.
"It is becoming increasingly likely that major Australian banks will attempt to alleviate the current pressure on their spreads by passing on the significant rise in funding costs to borrowers," she said.
The prospect of higher rates, along with the official rise last month, has already deterred some new borrowers.
And even if the RBA keeps rates on hold before Christmas, they could still spoil the New Year by increasing them before 31 December. Marquette Turner believe the latter to be more likely