CBA raises mortgage rates by 0.3 per cent for Unloan customers

Major banks are looking to pass on even higher interest rate hikes or increase them out of step with the RBA, as more Aussies become “mortgage prisoners”.

The Commonwealth Bank has slugged homeowners on its digital Unloan mortgage with a 0.3 per cent interest rate rise – higher than the amount the Reserve Bank of Australia hiked rates in February.

The RBA increased rates by 0.25 per cent in its February meeting taking interest rates to 3.35 per cent.

It comes as both CBA and NAB announced this week that their fixed home loan interest rates would be upped by as much as 0.4 per cent for new customers.

Unloan’s oversized 0.3 per cent increase would impact both existing and new customers.

CBA and Westpac have both pushed through rate rises out of cycle. Picture: NCA NewsWire/Bianca De Marchi

Despite causing more pain for homeowners, interest rate hikes look set to continue. This will have a knock-on effect, with analysts warning bank’s home loan profitability is under pressure from intense competition as people look to refinance and the number of new home loans slumps.

Unloan still offers one of the most competitive rates at 4.74 per cent and has also passed on 0.4 per cent less in hikes since rates began rising in May last year.

However banks are increasingly rewarding less risky prospects with better rates as Westpac’s lowest variable rate loan of 4.89 per cent is only available to new customers with a deposit of 30 per cent or more.

Westpac is rewarding borrowers with higher equity. Picture: Brendon Thorne/Getty Images

Meanwhile many Aussies also face the prospect of becoming “mortgage prisoners” with a chilling warning issued that some could be “forced into selling their homes” after a regulator refused to budge on a key issue influencing bank’s interest rates decisions.

Meanwhile, CBA has the biggest market share of home loans at 23 per cent but its stock fell from a record $111.15 on February 3 to $99.28 by Wednesday.

Soaring interest rates helped the Commonwealth Bank report a record $5.15 billion in first half profits, but analysts warned “headwinds” were set to hit.

Homeowners are facing becoming mortgage prisoners. Picture: NCA Newswire/Gaye Gerard

Russel Chesler, head of investments and capital markets at VanEck, warned “storm clouds are gathering over the banks” when they first announced their mega profits.

“CBA in their results announcement specifically addressed concerns around the looming fixed rate cliff, deposit rates and cyber security risk. All the good news has already been priced in. We can’t see net interest margins expanding any further as rates continue to rise and the majority of fixed rates roll off later this year,” he said.

“The bank is increasing its capital buffer, a sign of caution as headwinds for the economy increase.”