Out-of-cycle rate increases are a possibility if Standard & Poors continues with its intended overhaul of its lending system, according to reports.


The international ratings agency has announced its intention to change its rating system, potentially undermining the consistently strong ratings of Australian banks.


Standard & Poors will make a decision on the overhauling of its rating system following a year-long internal review.


Any changes to the large Australian banks credit ratings will likely result in out-of-cycle rate increase if their access to cheap credit is compromised.  


It has been speculated that a downgrading of the Australian bank ratings would result in a fall in local financial liquidity, forcing offshore lending.