* Rising mortgage costs adds to pressure for RBA rate cut
* A$ loses third of a cent, next support at $0.7150/65
SYDNEY/WELLINGTON, Oct 22 (Reuters) - The Australian dollar slipped on Thursday after a second local bank raised its mortgage rates, fuelling speculation official policy would have to be eased to counteract the tightening in finiancial conditions.
The Aussie fell around a third of a U.S. cent to $0.7201 AUD=D4 after Commonwealth Bank of Australia CBA.AX said it would raise its standard variable home loan rates by 15 basis points.
The move by the country's leading mortgage lender is aimed at clawing back higher regulatory costs and follows last week's decision by Westpac Banking Corp WBC.AX to increase its rates by 20 basis points.
Analysts assume Australia's two other major banks will follow suit, making for a rise in borrowing costs that could crimp both household confidence and spending power.
That in turn has led investors to narrow the odds on another cut in interest rates from the Reserve Bank of Australia (RBA). The central bank has shown little inclination to ease again after cutting rates to a record low of 2 percent in May, in part due to concerns over speculative froth in the housing market.
There have also been signs of a pick-up in activity outside the mining sector. A survey out Thursday showed Australian businesses saw a marked improvement in sales and profits last quarter and had turned notably more optimistic on the longer-term outlook. urn:newsml:reuters.com:*:nL3N12M00P
Yet markets are pricing in around a 24 percent 0#YIB: chance of an easing at the RBA's next policy meeting on Nov. 3, and a 52 percent probability for December.
Across the Tasman Sea, the New Zealand dollar held at $0.6760 NZD=D4 , having suffered its fourth session of losses on Wednesday. Support is seen at $0.6644, the 38.2 percent retracement level of its rally from $0.6235 to $0.6897.
Expectations that the Reserve Bank of New Zealand will pause at its Oct. 29 policy review after three consecutive easings have in part helped the kiwi rebound over the past month.
New Zealand government bonds 0#NZTSY= rose, sending yields 1.5 basis points lower along the curve.
Australian government bond futures edged higher, with the three-year bond contract YTTc1 up 2 ticks at 98.190. The 10-year contract YTCc1 rose 3 ticks to 97.3450, while the 20-year contract YXXc1 was up 3 ticks to 96.7900.