 Australian lenders all raise rates
St George Bank and Bankwest are the latest lenders to raise standard variable home loan rates.
The two banks followed the Big Four by increasing variable mortgage rates by 25 basis points, in line with the Reserve Bank of Australia's official rate rise last week. St George made a statement saying that effective from October 12 its standard variable mortgage rate will increase to 6.04 per cent per annum. Deposit interest rates on various savings accounts will also rise by 0.25 per cent.
"We are very mindful of the impact of increased home loan rates on customers and we encourage our customers to routinely discuss their banking arrangements with us, to ensure they have the right mortgage products to suit their individual circumstances," chief executive Greg Bartlett said.
Bankwest has also announced a rate rise of 25 basis points. Bankwest, which is owned by the Commonwealth Bank, will increase its variable mortgage rates from today. Last week, the big four banks - ANZ, Westpac, Commonwealth Bank and National Australia Bank - all announced a rate rise of 25 basis points following the RBA's decision to raise the official cash rate for the first time in 19 months.
An increase in interest rates of 25 basis points means an extra $35 per month on a $250,000 mortgage. This round of rate rises is not set to be the last. Forecasters are predicting further rate rises by the RBA in November, and several more next year. The cash rate is predicted to rise from 3.25% to at least 5% by this time next year. This will mean more rate rises for home owners and could see mortgage rates increase to around 8 per cent within the next 12 months.
The big four banks currently dominate the lending market with about 85 per cent of the mortgage market between them.
Most major banks say that they will review mortgage rates again next month, but warn that home loan rate rises could come independent of the RBA's management of the cash rate. Higher funding costs are being blamed for the bank rate rises.
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