No one will lose their house - Westpac

WESTPAC is unapologetic about its monster rate hike and says it is not a low-cost "Jetstar" bank.

Westpac chief executive Gail Kelly has promised that none of her customers would lose their home because of her bank's rate rise / Bloomberg

WESTPAC is unapologetic about the bank's monster rate hike last week saying it is not the "Jetstar of banking".

Hitting back at critics, which include consumer groups and Federal Treasurer Wayne Swan, Westpac chief executive Gail Kelly promised that none of her customers would lose their homes because of the rate rise.

Mrs Kelly added that she wanted customers to be "delighted by the experience" of dealing with Westpac.

"Look, interest rates remain very low, so no customer will lose their house as a result of this," Mrs Kelly said.

"We encourage customers to ring us directly, to communicate with us directly through our branches, through our bank managers, through our contact centres and through our senior leadership directly," she said.

"And we will talk to our customers, explain the basis of the decisions we make and actually provide additional assistance should that be required."

Westpac "not pursuing a low-cost strategy"

Westpac last week raised its standard variable mortgage rate by 45 basis points - almost double the increase in official rates.

Mrs Kelly and Mr Hanlon said Westpac's decision to hike its standard variable mortgage rate to 6.76 per cent was due to the cost of securing term funding from offshore wholesale markets.

Commonwealth Bank of Australia and ANZ raised their standard variable rates by 37 basis points and 35 basis points respectively.

National Australia Bank's rate rise matched the RBA, at 25 basis points.

Yesterday Peter Hanlon, the outgoing group executive for Westpac's retail and business banking, said Westpac was not the "Jetstar of banking", referring to the standard variable mortgage rates it charged customers.

"We don't have a price leading strategy," he told analysts and media at a strategy presentation yesterday.

"We're not the Jetstar of banking."

Mrs Kelly said federal politicians needed to understand that the bank was passing on rate rises due to higher wholesale funding costs.

"I think the politicians really do understand this new environment," she told analysts and reporters.

"They see first-hand the increase in the cost of deposit taking. They want us to be here for the long run."

Higher rates are "new normal"

Mrs Kelly described the new lending environment as "the new normal" and said all customers would pay more to borrow.

Her comments were at odds with Mr Swan who on Sunday said "any bank that used the RBA's official rate rise as an excuse to take families for a ride this Christmas is letting down their customers and their country".

Mr Hanlon said Westpac had grown its customer numbers and increased market share at twice the average rate of its competitors over the past 12 months despite having a standard variable rate that was around 17 basis points higher than its big four rivals.

"Seventy per cent of customers buy on service and only 30 per cent buy on price," he said.
Westpac closed down 15 cents at $23.89.

- with AAP and the Herald Sun