ANZ and Commonwealth Bank have followed Westpac in lifting rates for standard variable home loans citing wholesale funding costs, business performance and market conditions.

ANZ pulled the trigger just after midday on Thursday raising standard variable rates by 16 basis points with CBA falling in behind the bank just minutes later, lifting rates by 15 basis points.

Both rises were slightly higher than the 14 basis point rate rise from Westpac last week, heaping the pressure on NAB to recoup lost margins and join its big four rivals.

ANZ group executive Fred Ohlsson said the decision to lift rates was not easy. He said the decision to lift rates required the bank to balance the interests of many stakeholders including customers and employees but in this instance shareholders won out.

ANZ group executive Fred Ohlsson said the decision to lift rates was not easy and would not apply to customers in ...
ANZ group executive Fred Ohlsson said the decision to lift rates was not easy and would not apply to customers in regional Australia affected by drought.

Jessica Hromas

“This was a difficult decision given we know the impact rising interest rates have on family budgets. The reality is it is more expensive for us to fund our home loans on wholesale markets” Mr Ohlsson said.

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Commonwealth Bank’s group executive of retail banking Angus Sullivan said the bank could no longer absorb the impact of higher wholesale costs reflected in the 90 day bank bill swap rate (BBSW).

“We have absorbed these higher funding costs over the past six months in the hope that they would ease. Unfortunately, the costs have remained high and it is now expected that they will remain elevated” Mr Sullivan said.

Commonwealth Bank also looked to steer borrowers away from interest only loans which APRA has capped at 30 per cent, advising home owners to consider switching to a more competitive principal and interest loan.

Mr Sullivan said the bank was conscious of the impact the rate rise would have on households and the change would not take place for four weeks from today on October 4, 2018.

ANZ’s rate rise will take place three weeks from today on September 27. ANZ’s Mr Ohlsson said the bank would not raise standard variable rates for home owners in drought affected parts of Australia. The temporary reprieve from higher interest rates would cover 70,000 of the bank’s customers.

Following the rate rises the standard variable rate for an owner-occupier principal and interest loan at ANZ is 5.36 per cent, at Commonwealth Bank is 5.37 per cent and at Westpac is 5.38 per cent. The standard variable home loan rate at NAB is 5.24 per cent.

Westpac’s move to raise rates last week attracted the ire of the new Treasurer Josh Frydenberg who said the bank would need to explain its decision. Analysis performed on the 14 basis point rise – the smallest of the three so far – was that Westpac would reap an additional $1.4 million a day in revenue.

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