Following last week’s announcement from Westpac that they would be raising their variable home loan rates by 14 basis points, ANZ and the Commonwealth Bank have announced they will raise rates by 16 and 15 basis points respectively.
“The latest interest rate hike from ANZ and the Commonwealth Bank comes as no surprise after Westpac opened the floodgates earlier. The big banks have been noticeably more strategic about the timing of their hikes this time around against the backdrop of the Banking Royal Commission. It’s only a matter of time until NAB joins the fray,” said Kirsty Lamont, Mozo Director.
The Big Four banks have complained of funding pressures recently, and these rises should significantly help. Mozo reports the Commonwealth Bank will earn $568 million in extra interest charges over the coming year, while ANZ will earn $373 million extra.
It’s thought that the increases will cost the average home loan holder up to an extra $79 per month.
“While there has been a lot of adjustments to mortgage rates over recent years, the big difference with the latest announcement is that the higher mortgage rates are going to affect owner-occupiers. Most of the previous mortgage rate changes announced by the major banks have only affected investors and those with interest-only mortgages,” said CoreLogic’s Cameron Kusher.
Mr Kusher said it was interesting that the banks have timed the increases with Spring Selling Season, which usually sees them offer enticing mortgage rates.
“Overall this move seems likely to lead to a continuation of the currently weak housing market conditions over the coming months and may weaken the market further. From the lenders’ perspective, clearly they realise that the housing downturn is becoming entrenched (particularly in Perth and Darwin, but more recently in Sydney and Melbourne) and they are doing what they can to maintain profitability in the face of lower mortgage volumes,” said Mr Kusher.
“CBA and ANZ’s decision to hike rates hot on the heels of Westpac was a predictable step in what is becoming a well-worn routine. In fact, hiking on the same day means they can shoulder the backlash together,” said RateCity research director Sally Tindall.
“What this rate hike means is that the vast majority of variable rate home owners will now be shelling out more on their mortgage each month.
“NAB would do well to break free of tradition and find a different way to wear the additional expense,” she said.