Following the Reserve Bank’s decision to raise the official cash rate by 25 basis points yesterday, Westpac has moved first lifting its variable mortgage rate by 45 basis points.
At the time of writing, the other majors were yet to reveal their hand, but the indication is that they will soon follow suit.
Westpac’s group executive retail and business banking Peter Hanlon said rising funding costs were the reason behind the major’s decision to move out of step with the Reserve Bank.
“Our average costs of funding has risen dramatically, and it would have driven margins back over time, remembering that the increase in the 2009 margin only took us back to where we were two years ago,” Mr Hanlon said in a statement.
“These changes are regrettable, however, Westpac has withheld passing on the full amount of the increased funding costs we have experienced to ensure we could continue to support our customers through the economic downturn.
“While it is now necessary for us to pass on some of these increased funding costs, we will continue to take a considered approach to managing the impact on our customers of the challenging funding environment we are experiencing.”
Westpac’s new standard variable home lending rate of 6.76 per cent per annum, will take effect from Friday 4 December.
Repayments on the average $250,000 household mortgage are expected to increase by approximately $71 per month.