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RBA rate hikes kick in for variable borrowers

Borrowers with a CBA, NAB and ANZ variable home loan have had a 0.25 per cent interest rate rise, with the banks passing on the RBA’s November rate hike.

Westpac variable mortgage customers will also see their rates rise today.

The RBA’s record-setting rate hike cycle has now seen interest rates on variable-rate home loans rise 2.75 per cent since May, taking the average rate to 5.61 per cent according to RateCity.

RateCity.com.au Research Director Sally Tindall said the sharp increase in mortgage rates was starting to bite.

“Australians have broadly taken these rate hikes on the chin so far, but this further tightening of the screws will start to bite for some families,” Ms Tindall said.

“While the majority of Australian borrowers will be charged additional interest on their home loan from today, it’s going to take another two months or so before this extra money comes out of their bank accounts.

“If you think your budget is unlikely to hold up against this latest rate hike, don’t put your head in the sand, use this extra time to prepare for higher repayments.

Meanwhile, savers are now starting to find some relief as the big banks pass on some of the cash rate hikes to savings account holders.

CBA recently lifted rates on all key savings accounts by up to 0.30 per cent.

Westpac has increased the rate on most of its key accounts, however, existing eSavers miss out, with the biggest increase by 0.90 per cent for existing customers on its Life account.

NAB has lifted its Reward Saver by 0.25 per cent but existing iSaver customers miss out.

While ANZ has increased the rate on its new Plus Save account and Progress Saver, both by 0.25 per cent, existing Online Saver customers miss out.

Ms Tindall said banks were still picking and choosing which savings customers get a rate rise, with many savers still on a rate below the RBA benchmark.

“Westpac’s Life account roared back into business this month with a 0.90 percentage point hike, taking the ongoing interest rate to a competitive 3.50 per cent,” she said.

“Yet the bank’s existing eSaver customers haven’t seen an extra cent in interest from the latest RBA hike, leaving their rate at just 0.85 per cent.”

It’s important for savers to get the best interest rate they can according to Ms Tindall.

“Don’t just assume your bank is passing on the RBA hike each month,” she said.

“Give your savings account a health check against the competition at least every other month.

“Savers should be aiming for an ongoing rate that’s well over the cash rate, at a minimum.

“While these rates are becoming easier to find, customers are likely to have to be proactive to get them.”

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.