Big four banks pass on RBA rate rise to variable mortgage borrowers
Commonwealth Bank, Westpac and ANZ have joined NAB in confirming they will pass on the Reserve Bank of Australia’s 0.25 percentage point cash rate increase in full to variable-rate home loan customers.
CBA and ANZ said their updated variable mortgage rates would take effect on March 27, the same date announced by NAB. Westpac’s increase is due to apply from March 31.
Based on advertised rates once the changes are in place, Westpac is set to show the lowest variable rate among the four at 5.74%.
| Big four banks’ lowest home loan rates, post March cash rate hike | |||
|---|---|---|---|
| Old rate from | New rate from | Effective date | |
| CBA | 5.59% | 5.84% | March 27 |
| Westpac | 5.49% | 5.74% | March 31 |
| NAB | 5.94% | 6.19% | March 27 |
| ANZ | 5.75% | 6.00% | March 27 |
| Source: Canstar.com.au. Rates are for owner-occupiers paying principal and interest. LVR requirements apply. | |||
Mortgage borrowers faced the prospect of higher repayments after the Reserve Bank lifted the cash rate by 25 basis points to 4.1% on Tuesday. It was the second increase in two months, as the central bank seeks to rein in inflation amid fresh pressure on fuel prices after conflict broke out in the Middle East.
“CBA, Westpac and ANZ were quick to follow NAB in delivering the news no variable borrower wants to hear: their mortgage rate is on the rise,” said Sally Tindall (pictured right), data insights director at Canstar.com.au. “Between surging grocery bills, skyrocketing petrol prices, the end of electricity rebates and rising health insurance premiums, household budgets could well be breaking at the seams on the back of this news.
“When banks pass on the March hike, a typical $600,000 mortgage with 25 years remaining could see $91 added to monthly repayments. Combined with the February increase, that’s $181 extra per month these borrowers will need to cover.”
| Impact of switching or extending $600,000 loan | ||
|---|---|---|
| Change to minimum monthly repayment | Extra cost over life loan | |
| Switch to interest-only for 2 years | -$428 | +$30,699 |
| Extend loan term by 5 years | -$269 | +$141,956 |
| Source: Canstar.com.au. Notes: based on an owner-occupier paying principal and interest on the average P&I rate of 5.98%, and an interest-only rate of 6.86% | ||
Tindall urged borrowers who were struggling with repayments to contact their lender early rather than wait for arrears to build.
“If you’re starting to feel the strain, the worst thing you can do is stay silent,” she said. “Banks have a legal obligation to help, but you need to reach out early.
“Switching to interest-only or extending your loan term can offer short-term relief, but they come at a long-term cost. What eases your budget now may add thousands in interest later. These options should be treated as a lifeline, not a lifestyle – they’re there to help you through a rough patch, not as a permanent solution.”
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