Three majors have officially raised their standard variable mortgage rate in line with the Reserve Bank’s 25 basis point increase.
ANZ was the first of the majors to move yesterday, lifting its standard variable mortgage rate less than an hour after the Reserve Bank announcement.
CBA and Westpac soon followed suit, choosing to keep in line with the Reserve Bank and lift mortgage rates by just 0.25 per cent.
Effective from Friday 5 March, ANZ’s variable mortgage rate will sit at 6.91 per cent, CBA’s rate at 6.86 per cent and Westpac’s rate at 7.01 per cent.
At the time of publishing NAB was the only major left to announce its variable mortgage rate adjustment, however, it is widely anticipated that it will keep in line with the other majors and not raise its mortgage rate by more than the official cash rate increase.
In December last year Westpac was the brunt of much criticism after exceeding the Reserve Bank’s 25 basis point increase by an extra 20 basis points.
The decision to move above and beyond the official cash rate hike created a 27 basis point spread between the majors’ variable mortgage rates.
Three months on and the spread between the majors has not been narrowed, after the Reserve Bank decided to keep rates on hold last month.
The Reserve Bank’s decision to lift rates yesterday by 25 basis points from 3.75 per cent to 4.00 per cent, marks the first rate hike in three months, and the first for 2010.
RP Data’s research analyst Cameron Kusher said he was not surprised to see a hike in the official cash rate after last month’s grace period.
“Most economic news has been quite positive during the last month: property values are continuing to increase, consumer and business confidence is strong and inflation is under control,” Mr Kusher said.
“But despite these positive indicators it hasn’t all been such positive news. Dwelling approvals data released today showed approvals fell by 7.0 per cent in January.
“We expect that the RBA will continue to keep a close eye on housing finance, dwelling approvals/commencement and property value growth data. Higher interest rates are anticipated to result in a lower level of property value growth however, it is a fine balance. The RBA have previously indicated that they would like to see the supply of dwellings nationally increase. Given this, they would like to see the number of dwelling approvals/commencement increasing as well as the number of housing finance commitments for construction of new dwellings so that the supply of housing continue to increase at a rate commensurate with demand.”