By Chris Zappone
The country's big four commercial banks have moved in lock-step to raise their standard variable mortgage rates by the same amount as the Reserve Bank's quarter of a percentage point increase on Tuesday.
ANZ Bank, the National Australian Bank, the Commonwealth Bank and Westpac took almost two days to reveal their increases, most of which will take effect next Monday. The move adds about $40 to the monthly repayments on a standard 25-year mortgage of $300,000.
The ANZ will increase the standard variable mortgage rate for new and existing customers by the full 25 basis points from October 12, bringing the rate to 6.06 per cent.
NAB's rate will rise by the same amount to 5.99 per cent, the bank said. Westpac's rate will increase a quarter of a percentage to 6.06 per cent from Monday, the bank said.
The decisions follow the Reserve Bank's rate move on Tuesday, when it increased the cash rate from its 49-year low of 3 per cent to 3.25 per cent. The central bank cited the better-than-expected performance of the Australian economy, a view underscored by today's surprise fall in the official jobless rate last month to 5.7 per cent.
Rising funding costs, though, may mean commercial banks raise rates more than the RBA, analysts said.
Confidence
''The RBA's decision is a clear signal of its confidence in the recovery of the Australian economy," said Westpac's Group executive retail and business banking Peter Hanlon said.
Westpac said it will also pass along the rate rate on personal and deposit accounts including its Reward Saver, eSaver and Business Max-i Bonus accounts.
The Commonwealth's variable rate will also increase by 25 basis points to 5.99 per cent from next Tuesday, while key deposit rates will also increase by a quarter of a percentage point, the bank said.
''While improving market conditions have prompted this increase, the majority of Commonwealth Bank variable rate home loan borrowers are already making repayments at levels above the new minimum requirement,'' retail banking services group executive Ross McEwan said in the statement.
''The bank's wholesale funding costs remain high and continue to increase as previous long-term funding matures and is replaced with new funding at a significantly higher cost.''
The ANZ Bank also said it would raise rates on selected deposit products by as much as 0.50 percentage points per annum.
The bank also raised rates on fixed-rate loans for new customers by 25 basis points for one- and two-year loans to 5.7 per cent and 6.69 per cent, respectively. Rates for three-year terms will rise by 10 basis points to 7.09 percent, and 20 basis points to 7.69 per cent for four-year term loans. The 10-year loan rate will rise 25 basis points to 8.94 per cent, the bank said.
NAB said it will increase variable business lending and business deposit rates by 0.25 per cent starting Monday. Interest on deposits accounts such as iSaver will increase to 3 per cent from 2.75 per cent, while the iSaver with the introductory rate will increase to 4.65 per cent from 4.4 per cent at the same time.
Swan's warning
The size of the move will please Treasurer Wayne Swan who had warned the banks not to raise lending rates by more than the RBA's move.
Since September of last year, the RBA has cut a total of 425 basis points, or 4.25 percentage points, from the cash rate - prior to this week's rate rise. However, the big four banks have passed on an average of only 383 basis points in that time. They blamed the global financial crisis, and said it was necessary to maintain larger margins.
The global financial crisis, which drove up the cost of credit for non-bank lenders and promoted wary borrowers to flock to established brands, has increased the big four's dominance in the mortgage market. The four major Australian banks currently write about 90 per cent of new mortgages, up from 60 per cent before crisis hit.
Depositors, including retirees, could get some much-needed relief from the commercial banks, with many likely to receive $15.22 more in monthly interest on a standard $100,000 deposit if the full rate increase is passed on.