All major lenders join Westpac in passing on rate hike to customers in FULL adding to cost of living crisis – as expert warns it will only get worse
- All four of Australia big banks have passed on the full interest rate hike
- The RBA raised the cash rate by 0.5 per cent, the largest single rise in 22 years
- For the average $750,000 mortgage this will add $199 to monthly repayments
- Australians are already paying more for groceries, electricity, gas and fuel
Australia’s four big banks have announced they will pass on the full interest rate hike to home loan customers causing household mortgage bills to soar.
On Tuesday the Reserve Bank announced a 50 basis point jump in the cash rate pushing it up from 0.35 per cent to 0.85 per cent – the largest monthly increase in 22 years.
Westpac was the first of the big four banks to announce it would pass on the full rate rise on Tuesday, while NAB, the Commonwealth Bank and ANZ followed suit on Wednesday.
The move means variable interest rate loans will increase by 0.5 per cent across the four biggest banks with other lenders such as Macquarie Bank having also passed on the full rate hike.
The four big banks including ANZ have passed on the full interest rate hike of 0.5 per cent pushing up monthly mortgage bills for millions of Aussies
The most significant rate increase since 2000 will add $133 a month on a loan worth $500,000 over 25 years, and $265 a month on a loan worth $1million.
Investment bank Morgan Stanley said the rate rises would likely continue until the end of 2023 where the cash rate would reach as high as 2 per cent.
Those on fixed rate loans – on average 0.65 per cent below variable rate – would face a 2.65 per cent jump in their interest payments once the fixed period matures.
All up the bank said Australians could be paying a collective $35billion more in interest annually by the end of next year.
CBA group executive, retail banking Angus Sullivan said households concerned about their home loan repayments could access help from the bank.
Newly-elected Treasurer Jim Chalmers (pictured) acknowledged ‘we have an incredibly difficult challenge ahead’ for the economy
‘We encourage customers to contact us to discuss the options available to them including ensuring offset accounts are set up and linked to their eligible home or investment loan,’ he said.
CBA, NAB and ANZ will increase their rates from June 17, while Westpac’s will up their rate from June 21.
On the stock market, investors reacted to the rate hike by speculating there would be an increase in loan defaults – causing bank shares to fall.
ANZ dropped two per cent to $23.95 a share, while NAB fell 3.1 per cent to $29.18 and Westpac plunged by 4.8 per cent to $22.28.
Australia’s biggest bank CBA dropped by 3.4 per cent to $98.46 a share.
CBA shares fell on Wednesday afternoon with investors speculating loan defaults could increase
On Tuesday, newly elected Prime Minister Anthony Albanese refused to answer questions about the interest rate hike while on a diplomatic trip to Indonesia.
Millions of Aussies are already struggling with increased supermarket, electricity and petrol prices.
‘I said on day one, I will not be responding to domestic matters while overseas,’ Mr Albanese said.
‘I’ll leave that to [Treasurer] Jim Chalmers.’
He refused to take any more questions on the subject.
Treasurer Chalmers acknowledged ‘we have an incredibly difficult challenge ahead’.
‘High and rising inflation, rising interest rates, falling real wages at a time when our ability to respond to these challenges is constrained by the fact that the budget is absolutely heaving with Liberal debt,’ he said taking a swipe at Scott Morrison’s government.
The rate hike is equivalent to an extra $199 a month on an average $750,000 mortgage
‘We need to be honest and up front with the Australian people about the nature, the severity, the magnitude of this inflation challenge that we confront.’
He added that economists, government advisors and the RBA all predict that inflation ‘will get harder before it gets easier’.
‘Australians already know that because they are paying ever higher prices for their groceries and energy and now to service their mortgage as well,’ he said.
RBA Governor Philip Lowe now has no other way to get cost of living pressures under control after the Australian government handed out more than one third of a trillion dollars in stimulus during the Covid pandemic in 2020 and 2021.
The generous spending coupled with the record low interest rates to spur on economic growth, has seen inflation in the year to March surge to 5.1 per cent – the fastest rise 2001.
Westpac was the first to hike their variable interest rate on Tuesday but the other three major banks followed on Wednesday
How much more will YOU have to pay on your home loan?
$500,000: Monthly repayments to rise by $133 from $2,410 to $2,543
$600,000: Monthly repayments to rise by $159 from $2,890 to $3,049
$750,000: Monthly repayments to rise by $199 from $3,610 to $3,809
$1million: Monthly repayments to rise by $265 from $4,810 to $5,075
Data based on variable rate increasing from 3.11 per cent to 3.61 per cent