Three of Australia’s Big Four banks have adjusted their variable home loan rates upward one day after the central bank raised the cash rate for the third time in 2022.
On July 6, the Commonwealth Bank of Australia (CBA) was the first bank to pass the rise on in full by lifting the rates of its variable home loan products. ANZ and National Australia Bank quickly followed the move.
While Westpac has not made any announcements, the lending market expects the bank to catch up soon.
The CBA’s new rates will take effect on July 15, with the standard variable rate for owner-occupiers going up by 0.5 percent to 5.8 percent per year.
In addition, the rates of other home loan products rose to 6.29-6.64 percent per year.
“We understand the rapidly changing rate environment may raise questions for some of our customers, and we are here to help them,” said Angus Sullivan, the Group Executive for retail banking services, who encouraged customers to contact the bank.
On ANZ’s side, the bank announced that it would increase all of its variable interest home loan rates in Australia by 0.5 percent, starting from July 15.
ANZ said the change would cause an owner-occupier with a principal plus interest home loan of $450,000 (about US$305,000) to pay an additional $119 each month.
To help customers concerned about interest rates and their repayments, the bank said it had a number of options available, including a free home loan check-in that can help customers reorganise their loans.
Similar to CBA and ANZ, National Australia Bank also raised its standard variable home loan interest rate by 0.5 percent, with changes to be applied on July 15.
Meanwhile, all three banks have decided to raise their deposit rates by 0.5 percent.
More Challenging Times Ahead For Australians
As commercial banks started to follow the central bank’s steps, Treasurer Jim Chalmers warned Australians on July 6 about more challenging economic times ahead.
“It is going to be an incredibly difficult period for people. They should brace themselves for high and rising inflation and more rising interest rates,” he told ABC Radio.
“But things will get better. It’s the expectation of the Reserve Bank … that inflation will moderate next year. It will come back down to more normal levels. That will obviously be a big release to people.”
While the treasure did not expect Australia to go through a recession, he said economic consequences could occur if that happened in the United States.
“They’ve got higher inflation, and they’ve got a central bank that’s going to have to do a lot of work to try and rein that inflation in,” Chalmers said.
Meanwhile, Shadow Treasurer Angus Taylor said the Labor government did not have any economic plan to deal with ballooning inflation and rising interest rates.