Westpac decides to raise rates
WESTPAC will raise variable home loan rates by 14 basis points, effective from September 19, due to an increase in its wholesale funding costs.
Australia’s central bank has kept the official cash rate at a record low 1.50 per cent since 2016 and signalled a steady path for some time.
Westpac yesterday said its variable mortgage rate for owner-occupier properties will increase to 5.38 per cent per annum for customers with principal and interest repayments, while the rate for residential investment properties will go up to 5.93 per cent.
The move knocked the Australian dollar lower on speculation other lenders will follow Westpac and that might ultimately force the Reserve Bank of Australia to take an easing stance on interest rates.
“This is a tough decision,” said George Frazis, Westpac’s head of consumer bank.
The Bank Bill Swap Rate jumped about 25 basis points between February and March and has since remained elevated, Frazis said.
Faced with public anger over a series of malpractices, the country’s major banks had refrained from passing on the cost.
The 14 basis-point increase will add $A35 to the monthly interest cost of an average mortgage of $A300,000, Westpac said.