There is now a 27 basis point spread between the highest and lowest variable rates amongst the major banks after the RBA increased the cash rate last week.
All the majors passed on the RBA’s 25 basis point increase but every bank has taken a different approach to how much further they have gone with their variable rates.
Westpac was the first of the nation’s big four banks to move, raising its variable mortgage interest rate by 0.45 per cent.
NAB hit back at Westpac’s 45 basis points, and decided to pass on the 25 basis points indicated by the Reserve Bank.
On Friday, CBA and ANZ finally made the decision to raise their variable mortgage rate by 0.37 and 0.35 per cent respectively.
NAB now officially offers the most competitive variable mortgage rate of the majors at 6.49 per cent.
CBA follows closely behind with 6.61 per cent, while ANZ and Westpac offer 6.66 per cent and 6.76 per cent respectively.
CBA’s retail banking executive Ross McEwan said increasing wholesale funding costs were to blame for its decision to raise rates more than the Reserve Bank.
"While the change in the official cash rate has partly contributed to this interest rate increase, the sustained increase in wholesale funding costs that we are experiencing has also been a major factor," Mr McEwan said in a statement.
"Wholesale funding costs continue to remain at record highs and, as cheaper funding expires and is replaced with more expensive funding, the overall cost of our funds has increased."
He also pointed out that the Commonwealth has raised savings interest rates by 0.5 percentage points in an effort to attract more deposits to replace wholesale funding.
"As wholesale funding costs remain high we are also increasing our deposit interest rates," Mr McEwan said.
"This is good news for many of our customers who have been experiencing near historic low returns on their investments as banks have navigated through the global crisis."
ANZ says it was mindful of Australia's fragile economic recovery in its decision to restrict its rise to 35 basis points.