All four of the big banks have now passed on the RBA’s interest rate hike

All four of Australia’s biggest banks have now responded to the RBA’s rate hike announced earlier this week, and it’s not good news for anyone with a mortgage.

All four of Australia’s biggest banks have now passed on the interest rate hike to customers.

On Tuesday afternoon, the Reserve Bank of Australia (RBA) hiked prices by 25 basis points, bringing the cash rate to 3.35 per cent.

ANZ and NAB were the first of the big banks to announce their response to the hike.

On Thursday morning just before noon, Westpac and the Commonwealth Bank also made the inevitable announcement.

Westpac

For Westpac customers, the interest rates for home loans and savings account will rise by 0.25 per cent, in line with the latest rate hike.

That brings the total interest amount to four per cent.

Westpac’s eSaver total has risen to four per cent per annum while its 12-month term deposit is now at 4.1 per cent for 12 months.

And unfortunately, this has also translated to mortgages, increasing the total amount that cash-strapped homeowners on a variable rate will have to pay by 0.25 per cent.

04/11/2022. WESTPAC. Business stock logo pictures. Sydney CBD. Britta Campion / The Australian

Chris de Bruin, Westpac Chief Executive of Consumer & Business Banking, acknowledged these were tough times for mortgage holders.

“While the majority of our customers continue to be well-placed to navigate the rising rate environment, we know some might be feeling uneasy amid growing cost of living pressures,” he said.

“If customers are concerned, we encourage them to give us a call. The sooner they get in touch the better placed we are to provide support.”

These changes will come into effect on February 21.

CBA

Just minutes before Westpac passed on the rate hike, the Commonwealth Bank of Australia (CBA) also made a similar announcement.

It’s good news for anyone on a saving account but quite the opposite for borrowers.

CBA’s GoalSaver and Youthsaver have both risen in line with the hike, now dishing out four per cent interest per year.

These will kick in from February 10.

Meanwhile, the variable interest rate for borrowers has also increased by 0.25 per cent per year.

This will start from February 17.

MELBOURNE, AUSTRALIA – NewsWire Photos DECEMBER 14, 2022: Commonwealth Bank Melbourne, Banking, Commerce generics Picture: NCA NewsWire / David Geraghty

NAB

NAB said its home loan interest rate will increase by 0.25%pa from February 17.

NAB Group Executive for Personal Banking Rachel Slade said: “We acknowledge the RBA’s actions to bring inflation under control by increasing the cash rate but recognise that there are some Australians who will find this challenging.

“I encourage anyone who is worried about their situation to reach out to their bank.

“What we do know is that people are more engaged with their finances than they’ve been in a long time and that they are making their own adjustments to spend more ‘thoughtfully’ on non-essential purchases.

“At NAB, we have a dedicated team who take the time to listen to each customer’s individual situation and are able to offer tailored solutions – whether that’s reduced payment arrangements, payment breaks or restructuring their loan.

“When a customer gets in touch with NAB Assist at the early stages of their concerns about their finances, we’re able to get more than 95% back on their feet financially within three months.”

NAB is passing on the rate rise. Picture: NCA NewsWire / John Gass

ANZ

The bank said variable interest rates across ANZ’s Australian home loans will increase by 0.25%pa, effective 17 February 2023.

ANZ will also increase the rate available to savings customers on the ANZ Plus Save account for balances less than $250,000 by 0.25%pa to 4.00%pa, effective 14 February 2023.

ANZ Group Executive Australia Retail, Maile Carnegie said: “At a time of increased cost of living and rate changes, some customers will be feeling greater financial pressure.

“We urge anyone facing difficulties to speak with our expert teams to discuss the options available to support them and their specific circumstances as early as possible.

“We know many customers are looking closely at savings rates. Today we’ve announced we will again increase the rate on our ANZ Plus Save account, to take it to 4.00%pa.

“For customers that want greater certainty with their savings rate, last week we increased our 12-month Advance Notice term deposit to 4.10%pa,”

ANZ will lift its rates. Picture: NCA NewsWire / David Geraghty

Rate chaos continues

It’s been two months since Australians have endured a rate hike, after the central bank had a break over the Christmas period.

Analysis from comparison website Canstar found that for the average Australian on a $500,000 mortgage, their monthly repayments will jump by $969 per month or $11,628 per year if banks pass on the rate.

For homeowners stuck with a $1 million home loan, they’ll be lumping out an extra $1,939 a month, which is $23,268 over the next 12 months.

ANZ and Westpac both have forecast for the cash rate to peak in May once it reaches 3.85 per cent.

They expect two more rate rises after the February meeting to reach the terminal rate before Australians will get a reprieve.

Philip Lowe, governor of the Reserve Bank of Australia (RBA). Picture: Brendon Thorne/Bloomberg via Getty Images

NAB had a better prediction for struggling homeowners, forecasting that homeowners only have to endure two more months of rises.

The bank’s economists said by March, the interest rate will have peaked at 3.6 per cent.

The Commonwealth Bank had the most optimistic prediction of all, suggesting that interest rates could peak on Tuesday afternoon but then pause while the RBA reassessed and waited for more reports on inflation.

Meanwhile, Deutsche Bank has forecast the rate won’t start to go down until it hits 4.1 per cent.

Chief economist of Deutsche Bank, Phil O’Donaghoe, also predicted that Australia’s central bank will hike up prices four times this year, in February, March, May and August.

The February prediction proved true.

Originally published as All four of the big banks have now passed on the RBA’s interest rate hike