Reports early this month said the big four will give the Reserve Bank of Australia until next month to raise rates or they will go it alone, but a national accounting firm warned lenders that increase interest rates above RBA levels should have their market dominance reviewed by the Federal Government.

Chan & Naylor chief executive Sal Carrero said "The bumper-profits of the big four banks dispel the need for rate increases above Reserve Bank levels."

"This practice calls into question the competitiveness of Australian residential lending. Market dominance is emerging as a real threat to the housing sector.

"Market concentration has allowed the major banks to act with impunity. There is a genuine need for greater competition and consumer choice.

Mr Carrero said banks would be less inclined to increase rates beyond Reserve Bank levels if the competitive environment was more robust.

"Consumers have been let down by banks which continue to abuse their market dominance and it's time the Federal Government stepped-in," Mr Carrero said.

Chan & Naylor represents over 6,000 residential property investor clients nationwide.