Soaring rates a boon for savers

RATES jumped on almost 200 home loan products in the first week of December, with the average variable rate hitting 6pc.

Increasing home loan rates have a silver lining of increased savings rates / File

BORROWERS saw interest rates rise on almost 200 home loan products in the first week of December, with the average standard variable home loan rate growing to six per cent, a financial comparison website says.

But there is a silver lining for savers, with the interest rate on more than 10 per cent of deposit accounts rising the past month.

Figures from RateCity show that 19 mortgage lenders raised rates on 179 mortgage products since the Reserve Bank of Australia lifted the official interest rate by 25 basis points to 3.75 per cent on December 1.

That's an 8 per cent increase on the month before, the survey of the website's 2180 home loans found.

Of the big four banks, the biggest rate rise came from Westpac with a 0.45 per cent rate hike in response to the RBA's decision, while National Australia Bank (NAB) matched the central bank's rate rise with 0.25 per cent hike.

"It's no surprise to see NAB and the majority of loans rise by 0.25 per cent, RateCity chief executive Damien Smith said in a statement.

"While its better than the Westpac decision to lift rates by 0.45 percent, NAB and ANZ's rates are still not as competitively priced as many other smaller lenders."

National Australia Bank had the best standard variable rate of the major four banks at 6.49 per cent, but was ranked seventh for its best rate variable home loan.

ANZ has the second highest standard variable rate out of the big four banks at 6.66 per cent and Commonwealth Bank is third highest on 6.61.

"Borrowers should certainly be looking around for bargains lenders outside the big four are offering significantly better rates, and as rates rise, the cost of getting the wrong deal increases also," Mr Smith said.

"Some lenders appear to be biding their time for the spotlight to fade before lifting their rates.

Out of the smaller lenders, the Cyprus based Laiki Bank lifted its mortgage rates the most after taking two of its fixed home loan products 0.70 per cent higher and another two 0.60 per cent higher.

Meanwhile, 38 financial institutions raised the interest rate on 103 deposit accounts, an 11 per cent increase on the month before.

"To see four deposit accounts increase by more than 1 percent is quite impressive. In fact 21 deposit accounts were lifted by more than 0.25 percent according to our research," said Mr Smith.

"Banks, including ANZ, lifted a range of deposit accounts by up to 0.35 per cent, NAB by up to 0.30 per cent and Commonwealth Bank by up to 0.50 per cent, which is a strong level of encouragement," Mr Smith said.

"We're expecting competition between financial institutions for deposits to continue, as household deposits are generally cheaper for them than wholesale funds. Savers should be comparing online and making sure they get a great deal in this environment."

There were nine home loans that saw a rate rise of 0.50 per cent by Australian Defence Credit Union and University Credit Society.