Big bank customers bearing the brunt of rate hikes -
Reserve Bank of Australia

Big bank customers bearing the brunt of rate hikes

Customers of Australia’s biggest banks are bearing the brunt of the rate hikes seen over recent months. Westpac recently became the last of the big four banking giants to increase interest rates following the base rate hike from the Reserve Bank of Australia (RBA). As a result, borrowers are now being warned that significant changes are coming to their interest rates if they are customers of the biggest banks.

The RBA announced last week that the official cash rate was increasing by 0.5%, taking the base rate to 2.35%. Consequently, Westpac will increase its variable mortgage rates by the full 0.5% on 20th September. It will also increase the rate on its Westpac Bump Savings, designed for under 18s, by 0.65% to 2.35%.

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increase rates

Westpac chief executive of consumer and business banking Chris de Bruin said: “We understand that many Australians are carefully managing their household budgets at this time and we’re here to support our customers through the changing interest rate cycle. When we review our interest rates, we seek to balance the needs of multiple stakeholders, including home loan and deposit customers. We also consider several factors, including the increase to the cash rate, competitive environment, and the performance of our business.” 

Other banking giants set to increase rates

The other three leading banks in Australia have already announced they’re hiking rates by the full 0.5%. Commonwealth Bank (CBA), ANZ, and NAB will increase their rates later this week. At CBA, the rate hike will apply to all variable rate loans, including all applications still in progress.

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increase rates

Over recent weeks, several lenders have cut interest rates for new customers, including Westpac and Virgin Money. With competition increasing among lenders due to people shopping around for more affordable mortgages, many believe these cuts were aimed at bringing new borrowers on board.

However, for existing customers, the banking giants have hiked rates in line with the RBA cash rate, which could see vast numbers of variable rate borrowers continuing to bear the brunt of higher interest rates while new customers get the best deals.

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The move to increase rates could mean many with mortgages with the big four could struggle to keep on top of repayments. Banking officials have stressed the importance of discussing such difficulties with their banks to come to a resolution. Maile Carnegie from ANZ said: “While many of our customers remain in a strong position, we encourage any customer who may be facing difficulties to reach out to our experienced teams as soon as they can to discuss additional personalised support.”