Westpac joins other banks in raising mortgage rates

WESTPAC Bank has become the third bank in less than a week to raise its variable mortgage rates independently of the central bank due to increasing wholesale funding costs.

WESTPAC Bank has become the third bank in less than a week to raise its variable mortgage rates independently of the central bank due to increasing wholesale funding costs.

Westpac today said its standard variable home loan rates would rise by 10 basis points to 9.47 per cent from this Friday.

The action follows similar moves last week by ANZ and National Australia Bank.

Westpac said it must balance the needs of its customers against the needs of its shareholders.

"We are mindful that this additional rise will have an impact on some family budgets,'' Westpac group executive of consumer financial services Peter Clare said.

"But we want to reassure the community that we have responsible lending practices in place that offer a number of options to help customers manage changes in circumstances.''

Mr Clare said the bank's funding costs remain at record levels.

"Operating as we do in the global economy, long-term funding costs remain at record levels and our average cost of funds continues to increase,'' he said.

"We will continue to absorb a significant portion of the additional borrowing costs that we are experiencing on behalf of our customers.''

The big banks have mirrored all the of rate hikes engineered by the Reserve Bank of Australia (RBA) since last year.

But they have recently begun raising rates independently, as tightness in global credit markets increases their funding costs.

The RBA last raised official rates in February, when it pushed the cash rate up to 7.25 per cent.

It left rates steady in March and April, but economists believe there's a chance it could increase rates again in early May, before the Federal Budget is handed down on May 13.