Non-major banks bump up interest rates

Variable home loan rates on the rise again

Non-major banks bump up interest rates

Non-major banks are joining the big four banks, announcing their variable home loan rates are going up in June.

The Reserve Bank of Australia (RBA) hiked the cash rate target by half a percentage point on Tuesday, from 0.35% to 0.85%.  It follows a quarter of a percentage point rise in May, after almost 12 years of no increases.

Read more: RBA announces hefty rate hike

With inflation forecast to rise above 6% this year, the pressure is on the RBA to keep raising rates and normalising policy. Westpac Business Bank is forecasting annual headline inflation to peak above 6.5% in the final quarter of this year – well above the RBA’s 2% to 3% target band.

The official cash rate is the rate banks lend cash to each other overnight and has a high correlation to bank bill three-month swap rates. Changes to the cash rate target were effective from Wednesday, the day after the RBA’s OCR announcement.

Since Tuesday, there’s been a flurry of lenders announcing they will lift their interest rates, with Westpac being the first of the major banks. Westpac will carry out a 50-basis point increase to its variable home loan rates from 21 June. 

ANZ, CBA and NAB have now also announced their variable home loan rates will increase by 50-basis points in line with the cash rate rise.  Their rate increases will take effect from 17 June.  CBA’s standard variable rate will increase from 4.80% to 5.30% (principal and interest).

By Thursday morning, ING, Suncorp Bank, Macquarie Bank, MyState Bank, ME Bank, Virgin Money and BOQ were among the non-majors announcing increases to their variable rates, matching the cash rate rise.

ING has confirmed all variable home loan rates will increase by 50-basis points (0.50%) per annum, effective from 15 June.

Suncorp Bank variable rate home loans will increase by 0.50% per annum from 17 June. 

Suncorp Bank CEO Clive van Horen (pictured above left) said the bank was committed to supporting the financial wellbeing of its customers through uncertain times.

“As always, we look to balance the impact of rate changes on borrowers and savers. We understand these changes will impact some customers and encourage anyone who may be experiencing difficulty making repayments to contact us and discuss their situation," van Horen said.

As a guide, for every $100,000 of loan balance remaining on a 25-year variable home loan, customers could expect their monthly repayments to increase by around $26, van Horen said.

Macquarie Bank has also confirmed its variable home loan interest rates will increase by 0.50% from 17 June. 

MyState Bank variable home loan rates will increase by 0.50% from 20 June for new and existing customers. 

MyState Bank general manager of banking Huw Bough (pictured above right) said the bank remained focused on keeping interest rates competitive for deposit and lending customers.

Bough acknowledged that home loan customers faced the second interest rate rise this year, after over 11 years without one.

“Over the past month our customer care teams have been assisting customers with their questions and concerns. We will always advise our customers when interest rates change and let them know what the minimum monthly repayments will be, so they can work that into their budgets,” Bough said.

“We’re encouraging our customers to prepare for more interest rate rises in the months to come. Looking at household budgets now will help you manage any future changes.”

Read more: Could inflation tip the economy into stagflation?

ME Bank has confirmed its variable home loan rates will increase by 0.50% from 18 June.  Virgin Money variable home loan rates will increase by 0.50% from 14 June, and BOQ variable home loan rates will increase by 0.50% from 14 June.

Bank of Melbourne, BankSA, RAMS and St George Bank have also increased their variable home loan rates, each by 0.50%, effective from 21 June, according to RateCity.com.au.

Savings and term deposit rate rises

The cash rate rise has also brought forth a series of rate rises to selected bank savings and term deposit rates.

CBA has announced it will increase the bonus rate on its GoalSaver and Youthsaver accounts by 0.50% to 0.75% and 0.95% respectively, from 17 June. The bank said its 18-month term deposit special of 2.25% will be extended.

ING said its highest ongoing variable savings interest rate will increase by 0.75% per annum.  Eligible savings maximiser customers could bump up their savings (interest earned) by 2.10% per annum.

Interest rates across ING Australia savings accelerator offerings and personal term deposits (new and existing), will also increase.  From 10 June, ING will offer a 12-month term personal term deposit rate of 2.75%.

Suncorp has announced a new term deposit rate of 2.30% per annum for 12 months, from 15 June. Annual interest earned on its growth saver account will increase by 0.70%.

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