Senior Australian bankers looking for clean air in the run-up to the industry's AGM season might be disappointed next week when the Federal Government is expected to release the potentially explosive findings of the ACCC inquiry into the local mortgage sector.The final report was handed to Treasurer Josh Frydenberg on 19 November but its public release has been delayed as the government's hold on power has been imperilled by toxic internecine conflicts and a torrent of dismal opinion polls.The inquiry, commissioned by Scott Morrison earlier this year when he held the Treasury portfolio, was given a special instruction to examine the motives of the major banks for repricing their interest-only mortgage back books in June 2017.In that month each of the big banks hiked rates on all interest-only mortgages by at least 30 basis points.The hikes were induced by the Australian Prudential Regulation Authority's move to impose a limit on how much the banks could lend to new home borrowers in the form of interest-only mortgages.The regulator required the banks to cap interest-only volumes at 30 per cent of all new lending.But the banks exploited the cover gifted to them by APRA and applied the fat rate increase to thousands of existing borrowers on interest-only contracts.The banks' respective decisions to slug existing borrowers had no bearing on their obligations to meet the APRA requirement.While the regulatory limit only applied to new interest-only borrowers, Westpac and NAB still used the APRA cap to justify repricings of their back books.Morrison, at the time, was concerned that the banks had gouged interest-only home borrowers to recoup revenue they lost through the government's wholesale funding levy.While the ACCC would have found it extremely difficult to establish a causal link between the levy and the back book repricings, there is plenty of intrigue surrounding what else the inquiry might turn up.At least two of the major banks - Westpac and NAB - are especially vulnerable to claims of misleading borrowers because they each invoked the APRA standard on new interest-only lending to justify their wider-ranging hikes.George Frazis, the head of Westpac's consumer banking operation, explained the 34 basis point rate hikes on all interest-only loans in a press release issued on 20 June last year."We understand the significance of interest rate changes to our home loan customers, so we try to balance the needs of both owner-occupiers and investors in making these decisions," he said."APRA's limit on new interest-only lending is 30 per cent of new residential mortgage lending, so we have to continue to make changes to our interest only rates and lending policies to meet this benchmark."It is likely that the ACCC would have sought an explanation from Westpac on how Frazis' comments could justify repricing the loans of existing interest-only borrowers.NAB's former chief operating officer Antony Cahill also highlighted the influence of "regulatory requirements" and APRA's limit on new lending to justify a 35 basis point slug on the interest-only back book.The issue that the ACCC is likely to have pursued with