All four of Australia’s big banks pass on RBA rate rise

All four of Australia’s big banks have responded to the interest rate hike and it’s not good news for anyone with a mortgage.

The last of Australia’s big four banks has responded to the Reserve Bank of Australia’s cash rate hike earlier this week.

It means now all four banks have confirmed homeowners’ fears, announcing they will pass on the full 0.5 per cent interest rate rise.

The Commonwealth Bank was the first to move on Thursday morning. It was followed hours later by both Westpac and ANZ.

Then late on Thursday, NAB also followed suit.

It came as the RBA hiked interest rates on Tuesday for the fourth consecutive month.

Australia’s central bank increased the interest rate by 50 basis points, or by 0.5 per cent, bringing the cash rate from 1.35 per cent to 1.85 per cent, largely in line with economist’s predictions.

NAB lifted all its rates in line with that number, including its variable home loans, its savings accounts and term deposit accounts, to start from August 12.

Across the big four banks, the new rates will kick in from August 8, August 12, and August 18.

NAB became the last big bank to respond to the rise. Picture: NCA NewsWire / John Gass

NAB’s iSaver scheme and Reward Saver bonus rate will jump by 0.5 per cent to 1.75 per cent while its term deposits will increase by the same amount, taking them to have a three per cent return per annum.

And of course, the standard variable home loan rate will also be hiked by 0.5 per cent from August 12.

NAB Group Executive Personal Banking Rachel Slade said, “While most of our customers are ahead on their repayments, if you’re concerned, the NAB Assist team is ready to help. Please get in touch – the earlier the better.

“The first step is a conversation so we can help you get back on track.”

Hours earlier, Westpac announced it would pass on the full 0.5 per cent rate rise for new and existing customers effective from August 18.

But Westpac’s savers got some good news, with two options being lifted by 0.5 per cent.

Chris de Bruin, Westpac chief executive of consumer and business banking, said it understood the change in home loan interest rates will mean many customers will be reviewing their budgets.

“While more than two thirds of customers are ahead on repayments, we recognise after several successive interest rate rises, some may be feeling more financial pressure,” he said.

“We’re also putting a competitive fixed rate offer on the table to help give our customers more options as interest rates rise.

“New and existing customers could fix their loan for four years which may provide more certainty over their repayments, or split their loan between fixed and variable rates.”

Westpac has passed on the full interest rate hike to customers. Picture: NCA NewsWire / Paul Jeffers

Meanwhile ANZ’s higher mortgage rates will come into effect for both new and existing customers from Friday, August 12.

The lowest variable rate will now be increased to 3.69 per cent, just under that of CBA, which pumped up its lowest rate to 3.79 per cent.

Both of those rates are at three-year highs.

But just before 10am, the CBA said variable home loans would increase by 0.5 per cent per year from August 12 while term deposits would kick in with the higher return from August 8.

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The CBA is the first of the four big banks to pass on the rate rise to customers. Picture: NCA NewsWire / Emma Brasier.

The CBA’s variable mortgages as well as term deposit accounts and its NetBank Saver accounts will be impacted by the change.

Owner occupiers and investors on variable rate home loans will have to fork out an extra 0.5 per cent in interest every year.

CBA’s savings account will also increase by 0.5 per cent. With the new changes, the CBA’s term deposit scheme will sit at three per cent per annum.

The new term deposit rate will be available from 8 August, while the new NetBank Saver rate will take effect on August 12 along with home loans.

Group Executive, Retail Banking, Angus Sullivan, said: “We have been helping customers understand the changing rate environment and consider what it means for them, and we will continue to be there for them.”

All four banks have treated customers with radio silence about the rate rise so far.

Since May, the cash rate has risen by 1.75 percentage points, after four months of back-to-back increases by the central bank.

Macquarie Bank was the first to pass on the rate rise, doing so almost straight away.

It increased variable mortgage rates by 0.5 per cent, to come into play by August 12.

Rates on its savings and everyday transaction accounts also increased by 0.50 per cent.

Last month, Westpac gave customers the most amount of time to prepare for a change in its variable mortgages and also its savings rates, taking two weeks for the change to come into effect – although it announced the change within 24 hours.

The other three banks passed the change onto customers within 10 days after a swift response.

The Macquarie Bank was the first to pass on the rate rise (AAP Image/Joel Carrett)

The August hike isn’t expected to be the last, with economists forecasting that interest rates could peak up to two per cent by the end of the year.

Tuesday’s rate rise means those paying off the average home loan of $500,000 will need to cough up an extra $140 a month.

Tuesday’s decision marks the first time the RBA has lifted the rates for four months in a row since the introduction of the two to three per cent inflation target in 1990 in a sign of the inflation and cost of living crisis across the country.

This follows last week’s increase in annual inflation, which hit 6.1 per cent, which was its highest level in 21 years since 2001.

Tuesday’s rate rise means those paying off the average home loan of $500,000 will need to cough up an extra $140 a month.