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The major banks’ home loan customers with variable interest rates will feel the full sting of this week’s official rate rise after the big four announced 0.5 percentage point increases in mortgage rates, alongside increases in some savings accounts.
After a period of silence from the big four banks after the Reserve Bank’s rate rise on Tuesday, Commonwealth Bank was the first of the majors to move on Thursday, saying it would raise variable home loan rates by 0.5 percentage points, the same margin as the central bank’s move.
ANZ Bank, Westpac and National Australia Bank followed CBA’s lead and announced 0.5 percentage point increases for variable rate loans on Thursday.Credit:Paul Rovere
Within hours, ANZ Bank, Westpac and National Australia Bank followed had announced 0.5 percentage point increases for variable rate loans. For a $500,000 mortgage, this week’s rise in interest rates is likely to increase monthly repayments by $140 in August, RateCity said.
While the banks have passed on all the RBA’s rate rises since the central bank started tightening monetary policy in May, the increase in deposit rates has been far more limited and patchy. However, there are tentative signs banks are starting to compete more aggressively for household deposits by lifting rates on key savings products.
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CBA said it would increase rates on its NetBank saver product by 0.5 percentage points to 0.85 per cent. Meanwhile, Westpac announced various changes that included rate increases on its two biggest deposit accounts: it will increase rates on its eSaver account by 0.55 percentage points to 0.85 per cent, and it increased a bonus interest rate on its Life product.
NAB said it would lift base rates on the iSaver product by 0.5 percentage points, taking the standard variable rate to 0.85 per cent.
ANZ is looking to attract customers to its recently launched digital banking platform, ANZ Plus, by raising rates on a savings account on this platform 0.5 percentage points to 2.5 per cent. This increase will not apply to ANZ savings accounts outside the new platform, which are under review.
Since the RBA began raising interest rates in May, banks’ home loan rates have risen by far more than their rates on deposits, a dynamic that is boosting bank profits while attracting growing scrutiny from politicians and regulators.