A man looks at protestors of the "Occupy Sydney" movement as they march in front of the Reserve Bank of Australia in central Sydney November 5, 2011. Hundreds of protesters gathered on Saturday against economic inequality. REUTERS/Daniel Munoz (AUSTRALIA - Tags: BUSINESS CIVIL UNREST)Daniel Munoz / Reuters

Due to the rising dissatisfaction level among Australians with large banks, more people are bringing their business to credit unions. As a result of this change, a number of Aussie credit unions are becoming banks.

The first one is the Teachers Credit Union which is now the Teachers Mutual Bank (TMB) after it got the approval for the change from the Australian Prudential Regulation Authority (APRA). TMB Chief Executive Steve James said at least six more mutuals are expected to become banks in 2012.

The name change is one of the major measures of the 2010 banking reform package that gave the APRA

Despite the name change, Mr James said the institutions are still mutuals and will remain an alternative to the big four. However, by offering the security and safety of a bank, he expects more Aussies to switch to them.

Monthly switches of home loans to TMB from the big lenders are up 85 per cent from December 2011 to January 2012 after the Reserve Bank of Australia (RBA) cut interest rates. It was worsened by the big four increasing interest rates while the RBA retained the overnight cash rate at 4.25 per cent at the start of this year, causing a further 21 per cent growth in switcher numbers.

Gap between TMB standard variable interest rate of 7.04 per cent with the lowest rate offered by the big four is 27 basis points, driving Teachers' loan growth rate for the year to 6.5 per cent.

Standard & Poor's has given TMB, which sources 95 per cent of its funding from retail deposits, a triple B plus credit rating. TMB, which offers retail banking and wealth management products, has five branches in three states and 156,000 members throughout Australia.

The big banks are still hiking their fixed mortgage rates to make up for the earnings hit from the government ban on home loan exit fees. According to an analysis by ratecity.com.au, fixed rates are going up for the first time in almost a year, bridging the gap with standard variable rates.

ANZ General Manager of Mortgages and Deposits Glenn Haslam said the market has shifted its view on interest rates which pushed up the cost of funding term mortgages and increased fixed rate home loans.

ANZ hiked its two-year fixed rate to 6.34 per cent from 5.95 per cent and its three-year rate to 6.48 per cent from 6.14 per cent. Westpac raised its fixed rate by 14 basis points, National Australia Bank (NAB) increased it by nine basis points and Commonwealth Bank kept the rate steady at 6.48 per cent.

Standard variable rates now at the big four range from 7.31 per cent at NAB to 7.41 per cent at Westpac. The banks explained their increase in fixed rates to the shifting yield curve and the chances that the RBA would keep the official cash rate on hold for the next few months.

The gap between the standard variable and fixed rate among more than 100 banks and lenders has narrowed from 74 basis points to 6.87 per cent while the popular three-year fixed rate is at 6.35 per cent which prompted 3 per cent more customers to lock in rates.

The RBA board is slated to meet on Tuesday to discuss its overnight cash rate decision. It is expected to factor in the issues raised by the manufacturing and retail sectors and the huge investment in mining and a welcome drop in house prices.

Former RBA board member Professor Warwick McKibbin said the main domestic focus of the board would be how to strike a balance between weaknesses in some part of the Australian economy, offset by the strength of mining and accommodating at the same time the large investment entering the mining sector.

"The concern would be whether this is done through higher inflation eventually or by balancing aggregate growth in the economy, which means continued weakness in some sectors," The Sydney Morning Herald quoted Mr McKibbin.

He forecast that the RBA would still keep the 4.25 per cent interest rate.

ANZ is scheduled to announce its rate decision on April 14. Regardless of the RBA decision, RateCity Chief Executive Damian Smith believes the three other large Australian banks would rather wait for ANZ's move

"ANZ Bank's new monthly rate review has more or less become the de facto price setter for the industry.... This doesn't mean that RBA isn't relevant - far from it. It just means we now need to know both the RBA's decision and the ANZ's decision before seeing what the rest of the market will do," Australian Broker Online quoted Mr Smith.

He forecast a rate cut on Tuesday or at the next RBA board meeting in May.