Big Four Banks announced new rates

12 October 2009

In a move that doesn't surprise anyone the major banks have announced their new interest rates in response to last week's rate rise by the Reserve Bank of Australia. Last Tuesday the Reserve Bank raised its official rate for the first time in months from its record low 3 per cent to 3.25 per cent, sparking furious debate over how the big four banks of Australia will respond, with the government warning the banks to tread carefully and not increase too far.

The banks have been in a form of standoff during last week but the first move was made by ANZ which announced that it has increased its interest rates for variable rate mortgages by 25 per cent as effective from today, taking their rate from 5.81 per cent to 6.06 per cent.

The other big four banks have all followed suit with Westpac now matching ANZ with 25 point raise to its standard variable loan which is also at 6.06 per cent. Commonwealth Bank and National Australia Bank have also added the Reserve Bank rate rise to their own standard variable rate, both now sitting at 5.99 per cent.

While the big four banks have announced their rate increases many Australians are awaiting the reminder of the banking industry's financial bodies to announced their new rates with most expected to be announced over the next few days.

Treasurer Wayne Swan spoke of the impending rate rises stating that the Federal Government and Australian public would not tolerate the banks using the Reserve Bank official rate rise as an excuse to hike rates too high.

''I can't see any justification for the four majors to further increase their rates over and above any decision that is taken by the Reserve Bank,'' Mr Swan said.

The government will be encouraging competition in the mortgage market by introducing its residential mortgage-backed securities (RMBS) that is designed to help out smaller financial institutions.

''Competition puts downward pressure on rates and it's very important that we have a competitive mortgage market,'' Mr Swan said.

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