Australia’s big four banks have announced they will pass on today’s 0.25 percentage point cash rate hike in full to their variable borrowers.
As a result, the lowest variable home loan rate from the majors will be 5.99% from Westpac – the only big bank to soon have a rate under 6.00%.
All four majors are hiking their home loan rates on Friday 15 May. This is standard for CBA, NAB, and ANZ, but four days early for Westpac.
Big four bank | ||
|---|---|---|
Bank | Old rate | New rate |
CBA | 5.84% | 6.09% |
Westpac | 5.74% | 5.99% |
NAB | 6.19% | 6.44% |
ANZ | 6.00% | 6.25% |
Source: Canstar. Rates are for owner-occupiers paying principal and interest. LVR requirements apply.
While the big banks waste little time hiking customers’ mortgage rates, there is often a two- to three-month gap between a cash rate hike and that extra money coming out of a borrower’s bank account. In fact, some borrowers are yet to see an increase in their mortgage repayments from the March hike.
What about savers?
CBA, NAB, and ANZ have not said what they intend to do for their savings customers following today’s cash rate hike.
Westpac, on the other hand, has announced it will be passing on the full hike to its key savings accounts. However, those with a bonus saver account who don’t meet the terms and conditions won’t benefit from a rate hike in those months.
Westpac | |||
|---|---|---|---|
Max rate | Base rate | Change | |
Life | 5.00% | 0.10% | +0.25 |
Spend&Save | 5.75% | 0.10% | +0.25 |
Bump | 5.05% | 1.75% | +0.25 |
eSaver | 5.25% | 1.25% | + 0.25 |
Source: Canstar. Note: monthly conditions for bonus interest vary between accounts.
Further interest rate hikes could be waiting in the wings
NAB’s economic team has this afternoon upped its cash rate forecast, with another 0.25%-point hike in June.
Westpac was already forecasting further rate hikes, with two more pencilled in for June and August.
CBA and ANZ expect no further hikes, however, both acknowledge there is risk of a further hike in August.
Current big four bank | ||
|---|---|---|
Forecast | Cash rate | |
CBA | No | 4.35% |
Westpac | 2 x 0.25 | 4.85% |
NAB | 1 x 0.25 | 4.60% |
ANZ | No | 4.35% |
Rate hike will sting households already walking a budget tightrope
Canstar’s Data Insights Director, Sally Tindall, says, “The RBA has pulled the trigger on yet another rate hike, and as expected, Australia’s big banks are passing it on to variable borrowers in full.”
“For many households already walking a budgeting tightrope, this latest hike will sting.
“If you are paying the minimum, your bank will automatically increase this repayment and the associated direct debit, however, it will send you a letter outlining these changes and give you at least 20 days notice before that money comes out of your account.
“The reality is, most borrowers get two to three months following a cash rate hike before they have to fork out extra in repayments, even if their bank is charging them higher rates within days from an RBA rate hike announcement.
“The RBA has made it clear it’s determined to do what it takes to get the inflation dragon back in the target band, even if that takes until the end of next year. While the Governor has said the new cash rate is in a position where they can “be alert now to both sides of the risks”, the central bank is certainly not ruling out further hikes and anyone with a mortgage shouldn’t either.
“What remains unclear is what CBA, NAB, and ANZ intend to do for their savers. Westpac has already announced it’s passing on the hike to these customers, and while those with bonus saver accounts won’t see an increase if they miss their monthly terms and conditions, in most other circumstances, Westpac savers will benefit.
“With Westpac’s Spend&Save rate about to hit a maximum of 5.75 per cent, this will put some much needed pressure on the savings sector to stump up following this latest RBA hike.”
