There is more financial pain on the cards for Australian borrowers, with all four of Australia’s big banks announcing they would lift mortgage rates following the Reserve Bank’s Melbourne Cup day hike.
The Reserve Bank delivered a 25 basis point increase to the official cash rate on Tuesday.
WATCH THE VIDEO ABOVE: After four months on hold, the Reserve Bank has lifted the official interest rate.
The hike was the 13th in the last 18 months and took the official cash rate to 4.35 per cent, as the RBA looks to put a lid on inflation.
It means the average borrower with a $500,000 loan and 25 years remaining will see their monthly repayments increase by about $76.
NAB was the first of the big four banks on Wednesday to announce it was increasing its standard variable home loan interest rate by 0.25 per cent per annum. The increase is effective from November 17.
“While most of our customers are in good shape, there may be some people who are more concerned about the first rate rise since mid-year which is why it’s crucial to reach out to your bank as soon as you can. We’re here to help,” NAB group executive for personal banking Rachel Slade said.
Westpac and ANZ followed suit Wednesday afternoon, passing on the RBA hike in full from November 21.
“We know people are feeling the impact of the higher cost of living and adjusting their spending to manage their household budget,” Westpac chief executive of consumer banking Jason Yetton said.
“While customers are cutting back in response to rising expenses, our overall hardship numbers remain low and more than 70 per cent of customers are ahead on their mortgage repayments.
Commonwealth Bank of Australia was the last of the big four to increase its interest rates for variable home loans.
The 0.25 percentage point increase follows a four-month hold on rates at 4.1 per cent, with the RBA moving to the sidelines to observe the impact of its aggressive tightening cycle that started last year.
Data released over the past month pointed to uncomfortably persistent price pressures that cast doubt over the central bank’s late 2025 timeline for bringing inflation back to target.
In a post-meeting statement, RBA governor Michele Bullock said inflation had passed its peak but was still too high and proving more persistent than expected a few months ago.
Assistant Treasurer Stephen Jones said the government was exercising fiscal restraint in order to ensure inflation does not head north.
“We’re delivering, ensuring that as new revenue comes in that it’s banked and goes towards paying down the previous government’s debt and bringing down the deficit, fiscally responsible, not doing the cash handout thing,” he told Sky News.
“We’re doing what we can to ensure targeted cost of living relief, which is actually helping to bring inflation down.”
Opposition finance spokeswoman Jane Hume said the federal government was not doing enough and leaving it up to the RBA to do the heavy lifting.
“There has been so much money that has left the building without reference to a budget or without reference to a business case – that’s the extra spending that is potentially fuelling the fires of inflation,” she said.
– With AAP
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