The Commonwealth Bank, ANZ and Westpac have matched this week’s move by the central bank and raised their variable home loan rates.
CBA’s rates for owner-occupier and investor mortgages will rise by half a percentage point on 12 August.
This will take its standard variable offering, excluding a “wealth package” add-on, to 6.30%.
ANZ increased all variable interest rate indexes for its home loans by 50 basis points, also from 12 August. Westpac will also lift its key variable loan rates by 50 basis points.
The increases match Tuesday’s move by the Reserve Bank of Australia, which lifted its key cash interest rate to 1.85% from 1.35%. The banks will also increase deposit rates for some products by 50 basis points.
Westpac and National Australia Bank are yet to respond to the hike in official interest rates.
Macquarie Bank will increase its variable home loan rates by half a percentage point, but has said it will decrease fixed home loan interest rates by up to 0.75% percentage points for new customers and existing variable rate customers.
Sally Tindall, from Rate City, said the decision by Commonwealth Bank – the first of the big four to move – was expected.
“CBA’s decision to pass on the full hike to its variable rate borrowers comes as no surprise, however, customers already feeling the heat from the last three hikes may find this a difficult pill to swallow,” she said.
“From next week, CBA’s basic variable rate will hit a three-year high of 3.79% – a huge increase from three months ago when it was just 2.19%.
“Australia’s biggest bank is offering an olive branch to home loan customers worried about rising rates – a 4-year fixed rate special at 4.99% for owner-occupiers paying principal and interest.
According to Rate City, it will be the lowest four-year fixed rate from any lender.
“However, this doesn’t automatically make it a fantastic idea. People should think carefully about whether they want to lock up their mortgage for the next four years because there can be significant consequences if they decide to break their loan.
“Fixed rates have soared over the last 12 months on the back of rising funding costs, however, there are signs this could be starting to turn around.”
Rate City says Westpac has, unlike its competitors (so far), raised rates on all key savings accounts, in some cases by more than half a percentage point.
“Westpac’s decision will put pressure on CBA and ANZ to hike rates on the popular savings accounts they left out of their official rate announcements,” Tindall, said.