Big banks pass on full 0.5% rate hike
Three of the Big Four banks passed on the Reserve Bank of Australia’s full 0.5% interest rate hike in August.
CBA, NAB and ANZ have all raised their variable mortgage rates by that figure, while Westpac will wait until next Thursday to raise interest rates.
Standard variable rates will now hit 6.3% at CBA, with ANZ currently the lowest at 6.14% among the majors.
While variable customers will be charged the higher interest rate starting today, it will be several weeks before repayments increase.
RateCity.com.au research director Sally Tindall said banks typically give customers a minimum of 20-32 days notice before increasing their monthly repayments.
“Borrowers’ variable rates may rise today, but their monthly repayments aren’t expected to move for at least a few weeks,” Ms Tindall said.
“That’s because banks typically give borrowers at least 20 days notice before increasing their monthly repayments.
“This lag gives borrowers time to prepare for higher repayments, but it could also surprise some people.”
Ms Tindall said borrowers should seek clarification on when they will be required to pay higher interest rates.
“If you are at variable rate, find out what your new monthly repayment will be but also on what date it starts,” she specifies.
“Make sure you have enough money in your account to pay these higher refunds.
“If you think you won’t have enough money, call your bank before the deadline to avoid a black mark on your name.”
After a series of rate hikes, borrowers are starting to feel the pinch, according to Ms Tindall.
“This is the fourth rate hike in as many months,” she said.
“While most borrowers have weathered the storm so far, this could be a critical time for some households who are unprepared for a further increase.”
While mortgage rates are on the rise, savers are not yet fully benefiting from rising interest rates.
Australia’s largest bank, CBA, raised the ongoing rate on NetBank Saver by 0.5%, but only increased rates on popular GoalSaver and Youthsaver accounts by 0.25%.
NAB raised all of its savings rates by 0.5%, while ANZ left millions of savers out in the cold by only raising the rate on its new ANZ Plus Save account.
Westpac announced that it will increase most of its savings accounts by 0.50 to 0.55% next Thursday.
Ms Tindall said the gap between the lowest and highest savings rates was widening every month.
“Your bank may have done well with you this month by passing on the full 0.50 percentage point hike, but what ultimately matters is your interest rate and whether you stick to the your bank’s terms and conditions to qualify,” she said.
“If you want to make the right choice for your nest egg, look for an account that is above the absolute minimum cash rate.
“Passionate savers should now be able to earn current rates well above 2%.
“In fact, you can even exceed 3%, but you will have to go through stages to qualify.”
Ms Tindall said banks were slowly starting to offer higher interest rates to savers.
“For years, decent savings rates have come with a lot of fine print, but that’s changing,” she said.
“ANZ may not have been able to pass the hike on to its two main savings accounts, but it has increased its new Plus Save account at a rolling rate of 2.50% with no strings attached.
“Macquarie Bank is also shaking things up by continuing to pass full hikes through to its trading account.
“Macquarie customers can now earn 2.25% on every dollar available in their bank account, without any delicate details.
“It’s a breath of fresh air for people who hate having to shuffle around money.”