 Westpac shocks banking industry with rate rise
Westpac has shocked the financial industry by announcing increases to its home loan rates of 45 basis points. The Reserve Bank of Australia raised the cash interest rate by 25 basis points yesterday.
The nation's second biggest home loan lender made the announcement just hours after the RBA decision was announced. Other major banks are still reviewing rates and are yet to move or announce rate changes. The Westpac move has stunned industry experts. The first of the banks to move, Westpac has strongly defended its decision.
Westpac now offer a rate of 6.76 per cent, effective Friday December 4. However analysts say they doubted the other major banks would move as high as Westpac on competition grounds.
"The interest rate changes Westpac has announced today reflect the continuing cost pressures we are experiencing in wholesale funding markets as well as an increase in the official RBA cash rate,'' Westpac head of retail and business banking Peter Hanlon said in the statement.
Westpac also said the increase was "regrettable" but necessary due to higher funding costs.
Mr Hanlon said interest rates offered for Westpac's online savings and term deposit accounts were among the highest ever offered.
Treasurer Wayne Swan has expressed concern that some home owners may find rising rates very hard, but also stressed that emergency low rates could not last forever.
With the Reserve Bank next meeting in February, economists are predicting there will be another rate rise that month.
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