NAB lifts interest rates in response to Melbourne Cup RBA hike

Almost all of the big four banks has announced it would lift interest rates once again in response to the RBA’s Melbourne Cup hike, increasing pressure on homeowners.

More mortgage pain has been passed onto Australian homeowners with three of the big four banks announcing they will increase interest rates just one day after the Reserve Bank delivered a Melbourne Cup hike.

NAB was the first big bank to lift its standard variable home loan interest rate, increasing it by 0.25 per cent per annum as it moves swiftly to adjust its rates in light of the RBA’s new 4.35 per cent cash rate.

The company’s base variable rate home loan is currently pegged at 6.59 per cent per annum.

That was followed by ANZ on Wednesday afternoon, announcing it would follow suit with a 0.25 per cent per annum rise across its variable home loans.

ANZ expects the change will increase monthly repayments by $70 on a variable home loan of $450,000 for an owner occupier paying principal and interest.

Both banks will bring in the changes from November 17.

Westpac will also pass on the 0.25 per cent hike for new and existing customers with variable interest home loans, bringing in the change from November 21.

Australian banks have started raising their rates in response to the RBA’s Melbourne Cup hike. Picture: NCA NewsWire / Roy VanDerVegt

The big baks aren’t the only ones increasing their rates, with ME Bank, Bank of Queensland and Virgin Money anouncing full rate increases for variable mortgage customers.

RateCity research director Sally Tindall warned customers that they have valuable time to get their finances in order before the hike is passed on.

“Westpac, NAB and ANZ mortgage customers have around two weeks before they get hit with higher rates, however, banks typically take a couple of months before they debit this extra money out of customers’ accounts,” she said.

“If your budget is tight, use this time to work out a way to inject relief into your finances so you can clear this extra cost. If you can’t, call your bank immediately for help.”

NAB personal banking executive Rachel Slade encouraged customers concerned about their finances after the increase to “reach out” to the bank.

“While most of our customers are in good shape, there may be some people who are more concerned about the first rate rise since mid-year which is why it’s crucial to reach out to your bank as soon as you can,” she said.

ANZ Retail executive Maile Carnegie said the bank has been “proactively” reaching out to home loan customers to check in on their circumstances and will continue to do so.

“Our team is trained to support customers, and we encourage anyone who would like to better understand the options available to them to connect with us,” she said.

Adelaide Bank, part of the ASX-listed Bendigo and Adelaide Bank, announced on Wednesday it would increase its fixed-rate loans for owner-occupiers by 0.1 per cent per annum for one-year products, 0.25 per cent for two-year, 0.45 per cent for three-year and 0.55 per cent for four-year and five-year offerings.

The same rates apply for investment properties.

RBA governor Michele Bullock says inflation is still too high. Picture: NCA NewsWire / Martin Ollman

The bank currently offers five-year loans for owner-occupiers at 6.04 per cent per annum, principal and interest.

The new rates come in from Friday.

Bendigo and Adelaide, a $5.2bn enterprise, is the first big bank to raise its rates after the RBA’s increase.

The Reserve Bank has moved sharply to tame a surge in inflation following supply shocks from the Covid shutdown and the breakout of war in Ukraine.

It raised the cash rate from 0.1 per cent in April 2022 to 4.1 per cent in June 2023, and on Tuesday, RBA governor Michelle Bullock announced a 25 basis point hike to 4.35 per cent.

The RBA cash rate serves as a benchmark for interest rates in the economy, with banks generally quick to raise mortgage rates as a result.

“Inflation in Australia has passed its peak but is still too high and is proving more persistent than expected a few months ago,” Ms Bullock said on Tuesday.

Athena Homes Loans has announced it will adjust its variable rates in line with the RBA’s increase, with the new rates effective from Thursday.

Originally published as NAB lifts interest rates in response to Melbourne Cup RBA hike