Westpac last of the big four banks to raise interest rates after Reserve Bank of Australia decision

A major change is coming to your interest rate if you bank with one of the big four. Here’s what you need to know.

Westpac has become the last of the big four banks to increase interest rates following the Reserve Bank of Australia’s decision last week to raise official cash rate by 0.50 per cent to 2.35 per cent.

The bank will increase its variable mortgage rates by 0.50 percentage points on September 20.

It means the Westpac Life total variable rate with bonus interest will increase by 0.50 per cent to 2.35 per cent.

The Westpac Bump Savings, for people aged under 18, total variable rate with bonus interest will increase by 0.65 per cent to 2.35 per cent.

Customers will be able to access a new term deposit offer of 3.25 per cent for 12 to 23 months from Tuesday.

Australia’s four big banks are raising interest rates. Picture: NCA NewsWire

“We understand that many Australians are carefully managing their household budgets at this time and we’re here to support our customers through the changing interest rate cycle,” Westpac chief executive of consumer and business banking Chris de Bruin said.

“When we review our interest rates, we seek to balance the needs of multiple stakeholders, including home loan and deposit customers.

“We also consider several factors, including the increase to the cash rate, competitive environment, and the performance of our business.”

St George said it would also increase its variable home loan interest rates by 0.50 per cent from September 20 for new and existing products.

It means the owner-occupier loan for principal and interest will go up to 6.81 per cent, while the basic home loan will rise to 6.23 per cent.

The Commonwealth Bank, NAB and ANZ have already announced they are lifting their interest rates by 0.50 per cent effective from September 16.

Changes will apply to all variable products at CBA, including all work in progress applications.

The Reserve Bank of Australia last week raised the official cash rate by 0.50 per cent to 2.35 per cent. Picture: iStock

CBA will also increase the interest rates across some of its savings products.

GoalSaver with bonus interest rate will increase by 0.60 per cent to 2.10 per cent.

Youthsaver with bonus interest rate will also increase by 0.60 per cent to 2.30 per cent.

CBA’s 18-month term deposit special offer of 3 per cent will also be extended.

Some term deposit interest rates will increase by up to 0.75 per cent from Monday.

CBA is also extending its four-year fixed rate special of 4.99 per cent for owner-occupiers paying principal and interest with a home loan package.

The three-year interest only investment home loan fixed package rate of 5.49 per cent is also being extended.

ANZ said the change would increase monthly repayments by $125 on a variable home loan of $450,000 for an owner-occupier paying principal and interest.

“While many of our customers remain in a strong position, we encourage any customer who may be facing difficulties to reach out to our experienced teams as soon as they can to discuss additional personalised support,” ANZ group executive Australia retail Maile Carnegie said.

Many people are feeling pressure to make their mortgage repayments.

NAB group executive for personal banking Rachel Slade said an early conversation with your bank was important to staying on track financially.

“When customers speak to our NAB Assist team early, we see that 90 per cent of our customers are back on their feet within 90 days,” she said.

Rate City research director Sally Tindall said like CBA, Westpac had decided to lift only some of its savings rates this month.

“There will now be pressure on NAB and ANZ to step up after they notably left savers out of their RBA announcements on Friday,” she said.

“Westpac customers with Life and Bump accounts will see decent rises this month; however, those with eSaver accounts are still only getting an ongoing rate of 0.85 per cent – that’s 1.5 percentage points below the cash rate and 2.75 percentage points behind the market leader.”

Meanwhile, ING will increase its savings rates and will soon offer a rate of 3.6 per cent on its Savings Maximiser account – the equal highest ongoing savings rate alongside Virgin Money.

“If you’re serious about growing your savings, know that once the hikes filter through, a competitive rate will be over 3 per cent,” Ms Tindall said.

Originally published as Westpac last of the big four banks to raise interest rates after Reserve Bank of Australia decision