Australia’s major banks follow RBA’s ‘super-sized’ June interest rate rise

All of Australia’s big four banks have increased their mortgage rates in line with Tuesday’s RBA interest rate rise.
ANZ and NAB announced the move on Wednesday, bringing them in line with Commonwealth Bank. Macquarie Bank, Westpac and Bank of Queensland had already moved in line with the RBA.
Wednesday’s news came after Westpac revealed it would pass on RBA’s 0.5 percentage point increase in full to new and existing borrowers on variable rates.
Westpac is also introducing a term deposit rate of 2.25 per cent per annum for 12 months to support customers with their savings from 9 June. Other deposit interest rates remain under review at this time.
“We know a change in interest rates affects every budget differently. Our customers have managed their finances carefully during the pandemic, with many putting more funds aside in their savings and offset accounts. This means the majority of our customers are ahead on mortgage repayments and have a buffer available to help them manage an interest rate increase,” said Westpac Consumer and Business Banking Chief Executive, Chris de Bruin.
“To help customers through the changing interest rate environment, we offer our customers a range of tools to help them manage their home loan repayments. Customers can use our online mortgage repayment calculator to see how adjusting their loan amount, term or interest rate will impact them or help pay off their loan sooner.
“For customers who need some extra help or who are in financial difficulty, we have our specialist teams standing by who will work with them to tailor a financial solution to meet their needs. We encourage customers doing it tough to call us as soon as possible.”
Other major banks yet to respond
Westpac is the first bank to respond to the rate hike today, the other big three have not responded.
Last month, the Reserve Bank raised the cash rate by 25 basis points, from the historic low of 0.1 per cent to 0.35 per cent.
This month, experts were predicting a second rise of 25 or 40 basis points, but the RBA once again caught the market off guard by lifting the cash rate by 50 basis points, bringing the official interest rate to 0.85 per cent.
Meanwhile, some insiders expect the cash rate to climb even higher to 2.5 per cent by the end of the year in a desperate bid to bring inflation back under control, with the RBA’s own forecasting predicting the cash rate will increase to around 1.75 per cent by the end of 2022.
Now, all eyes are on the nation’s biggest lenders, with customers anxiously waiting to hear if they will pass on today’s rate rise in full – a prospect AMP’s chief economist Shane Oliver believes is likely.
“Banks are likely to pass the RBA’s rate hike on in full to their variable rate customers and deposit rates will rise further,” he said in a statement following the RBA announcement.
“Fixed mortgage rates have already moved up in line with rising bond yields in anticipation of higher cash rates – more than doubling from record lows around 2 per cent early last year.
“While the rate hike adds to the cost of living the RBA has little choice but to ‘normalise’ interest rates.”

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