 Major banks increase interest rates to borrowers
The Commonwealth Bank of Australia Ltd, Westpac Banking Corporation Ltd, ANZ Banking Group Ltd and National Australia Bank Ltd have followed the lead of Reserve Bank of Australia (RBA), raising mortgage rates by 25 basis points.
CBA was the first to increase the interest rate to borrowers from its standard variable rate (SVR) on mortgages of 25 basis points to 7.11 per cent. The bank also gave notice that it will raise the interest rate applying to its NetBank Saver deposit account and Business Online Saver accounts by 25 basis points. All CBA changes and increases in market interest rate and wholesale funding cost will take effect in April 9.
Next to follow the move was Westpac and ANZ, which also increased their standard variable home lending rates by 0.25 per cent.
Effective April 9 Westpac’s standard variable home lending rate is raised to 7.26 per cent per annum, with variable business lending and credit card rates also set to rise by 0.25 per cent. This will result to an increase payment by about $40 per month on the average $250,000 household mortgage.
“Westpac will also pass on a 0.25 per cent increase to our key online savings accounts including Westpac Reward Saver, eSaver and Business Maxi Bonus to ensure that our consumer and business customers continue to benefit from historically high deposit rates,” Westpac Retail and Business Banking executive Rob Coombe said in an interview.
ANZ also announced its interest rate increases on a range of deposit and lending products by 25 basis points.
With changes to effect starting April 9, ANZ's standard variable rate home loan will be up to 7.16 per cent, while rates for business lending and credit cards will rise by 25 basis points.
"Selected deposit products will rise by up to 0.25 per cent per annum, including ANZ Online Saver up 0.25 per cent per annum and ANZ Progress Saver up 0.25 per cent per annum," ANZ said in a statement.
According to Phil Chronican, ANZ Australia chief executive, despite continued cost of wholesale debt, the bank had decided to follow the official moves on rates.
NAB was the last of the major lenders to follow, with its standard variable home loan interest rate, along with a range of other deposits, to increase by 0.25 per cent. Effective April 9, NAB standard variable rate becomes 6.99 per cent.
The bank also announced its increase on interest rates on its Homeside products and some consumer deposits from April 9, 2010, as well as a range of business deposit and variable business lending products starting April 12. Its funding costs on the other hand would rise in 2010 and it accounts for this in all interest rate decisions.
For a quick guide:
The SVR for mortgages offered by the major banks now stands at 7.11 per cent at CBA, 7.26 per cent at Westpac, 7.16 per cent at ANZ, and 6.99 at NAB.
The Mortgage and Finance Association of Australia (MFAA) says that this latest interest rate hike should remind people to shop around for the best home loan. According to MFAA chief executive Phil Naylor, other factors to consider in mortgage aside from the interest rates levels of service offered by a lender and flexibility of repayments.
"We are seeing increasing competition in the lender market, with smaller banks and credit unions making a strong comeback," Naylor said.
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