ANZ and St George hike rates

ANZ and St George have both hiked home loan interest rates by 35 basis points - outstripping the RBA's rate hike by 10 basis points.

ANZ and St George have both hiked home loan interest rates by 35 basis points - outstripping the RBA's rate hike by 10 basis points.

The rises match a 35 basis point rise announced by the Commonwealth Bank of Australia yesterday.

From tomorrow, the standard variable rate home loan rate at both ANZ and St George will hit  9.37 per cent.

Last week, the Reserve Bank of Australia lifted the official cash rate by 25 basis points to 7.25 per cent - its highest level in almost 12 years.

The Federal Government has been urging the big banks not to transform the central bank's rate rise into a "double whammy''.

But Australia's big four banks have all now raised their rates by more than the official cash rate increase in order to claw back some of their higher borrowing costs.

The CBA's standard variable home loan rate will rise to 9.32 per cent from 8.97 per cent from tomorrow.

Westpac customers were hit last week with a 30 basis point rise in its standard variable mortgage rate, to 9.27 per cent.

National Australia Bank customers will pay a 9.27 per cent, a rise of 29 basis points.

ANZ group managing director for personal banking Brian Hartzer said the increase reflected the higher cost of borrowing that was affecting banks around the world.

"Not only is wholesale funding now coming at a much higher cost but liquidity is continuing to tighten as global markets ration debt funding,'' Mr Hartzer said.

"We have been absorbing a significant part of the increase in the cost of funds, but unless we strike a balance between absorbing some of the increase and passing some on to customers we will ultimately be limited in the amount we are able to lend customers to buy houses or to expand their businesses.''

Mr Hartzer said the ripple effects of the US sub-prime lending crisis had worsened since January.

"ANZ is now paying up to an additional 20 basis points over and above recent Reserve Bank increases for the short-term wholesale funds it lends to customers and even more for term funds.

"We hope global market conditions will ease in the medium term and more normal conditions will return.

"We are committed to passing on reductions in wholesale interest rates by reducing lending rates for customers when that occurs.''

St George's chief financial officer, Michael Cameron said the bank had been absorbing a significant increase in its funding costs since August last year.

"While we had hoped that conditions would soon return to normal, in fact we have seen these costs continue to increase," Mr Cameron said.