After two days of silence, two of Australia’s “big four” banks have finally confirmed they will raise variable mortgage interest rates by 0.5 percentage points.
Commonwealth Bank was the first of the “big four” banks to pass on the Reserve Bank’s latest rate hike on Thursday morning, followed shortly by ANZ.
The RBA raised its cash rate target by 0.5 percentage points on Tuesday, taking the new rate to a six-year high of 1.85 percent.
It was no surprise that commercial banks passed on the RBA’s rate hike to their borrowers. However, the surprising aspect is how unusually slow banks have been in making these announcements in recent days.
Space for play or pause, M for mute, left and right arrows for search, up and down arrows for volume.
Westpac and NAB have yet to provide an update on their new borrowing rates.
Australia’s fifth-biggest lender, Macquarie Bank, was the first bank to lift its floating rates within hours of the RBA’s decision on Tuesday.
This was followed on Wednesday by ubank, a subsidiary of NAB, which announced it would raise its savings rates by 0.5 percentage points in September.
Delay in being the first mover
“This kind of waiting game is unusual, but not unprecedented,” said Sally Tindall, director of research at RateCity.
Tindall said the last time there was “radio silence” like this from the banks was about 12 years ago.
“In 2010, three of the big four banks took eight to 10 days to make announcements after the RBA’s 0.25 percentage point hike on November 2.”
“The delay could be a worrying sign for savers. Banks may still be mulling over whether to pass on the full hike to all their savings customers.”
“However, the big four banks could be playing a game of chicken to see which of them moves first.”
CBA increased its standard variable rates for its borrowers by 0.5 percentage points. That brings the lowest variable rate to 3.79 percent.
In a surprise move, CBA also decided to cut its lowest four-year fixed rate to 4.99 percent (down 1.60 percentage points). But it only applies to homeowners who pay principal and interest
The bank also said it would increase the rate on “selected savings products”, meaning it has not passed on the full RBA rate rise to all savers.
Similarly, ANZ said it would increase all its variable mortgage rates by 0.5 percentage points, and for one of its savings accounts, ANZ Plus Save.
Both banks also offer term deposits that pay higher interest: CBA will pay savers 3% annual interest if they agree to lock their money with the bank for 18 months. ANZ offers the same rate, but for an 11-month term deposit.
Federal Treasurer Jim Chalmers has been pressing banks to pass on the RBA’s interest rate rises in full to savers who have had record low returns in recent years.
Shortly before the RBA’s decision on Tuesday, Dr Chalmers said the big banks should do the right thing and charge higher interest rates to customers with savings accounts.
“There have to be some positives to this,” he said.
“For savers, they need and deserve higher interest rates on their savings.
“So I will have the opportunity to convey directly to the banks my expectation that these interest rate rises will be passed on to savers.”