Following the trend of the past seven cash rate increases, all major banks will pass on the December's increase in-full to new and existing variable home loan rates.
PropTrack Senior Economist Eleanor Creagh said with inflation remaining high and increasing evidence of labour market tightness, the RBA has continued to raise the cash rate at the fastest pace since the 1990s to ensure inflation expectations remain 'anchored'.
“The fastest rise to the cash rate since the 1990s has quickly rebalanced the housing market from last year’s extreme growth levels, with prices falling in most parts of the country," Ms Creagh said.
“Now the cash rate is sitting at 3.10% after a substantial 300 basis points of tightening to date, maximum borrowing capacities have dropped by more than 20%."
Below is a selection of variable rate home loans from the major banks.
NAB – Base Variable Home Loan (Principal and Interest) (New Customer)
Westpac – Flexi First Option Home Loan (New Customer) (LVR > 80%)
ANZ – Simplicity PLUS Investment Loan (Interest Only) (LVR < 70%) Special Offer (New Customer)
Commonwealth Bank – Extra Investment Loan (Principal and Interest) (LVR < 80%)
Westpac has become the first of the big-four to respond within the space of a couple of hours to the RBA's December decision, flagging its intent to pass on the cash rate increase in full to variable rate mortgage holders.
This 0.25% increase will come into effect from 20 December 2022 for new and existing customers.
Westpac will also increase savings account rates across both Westpac Life and Westpac Spend&Save accounts.
Westpac Life customers will receive a savings account rate of 3.75% p.a. from 16 December, while Spend&Save customers aged 18-29 will receive a rate of 4.35% p.a. - an increase of 0.35% p.a.
Westpac Consumer and Business Banking Chief Executive Chris de Bruin noted customers are paying extra attention to their household budget in the lead-up to Christmas and looking at ways to manage their money into the New Year in the changing economic environment.
“While the majority of our customers are managing well through this cycle with a strong jobs market and savings built up during the pandemic, we understand some customers may find it more difficult," Mr de Bruin said.
“We’re continuing to increase savings interest rates to support customers saving for the future."
The second of the big-four to respond to RBA's December decision, NAB will increase home loan interest rates for variable customers by 0.25% p.a. from 16 December 2022.
Unlike Westpac, at current NAB is yet to announce an increase to savings accounts detailing that the market for savings accounts is dynamic with the bank having already made more than 45 increases to savings products since 1 May.
NAB Group Executive for Personal Banking Rachel Slade said it’s important for anyone finding the increasing interest rates a challenge to lean on their bank for support.
“Regardless of who you bank with, I encourage people to speak to their bank early if they are concerned," Ms Slade said.
Following the lead of Westpac and NAB, ANZ has responded to the RBA's December decision with a 0.25% p.a. increase to variable rate home loans from 16 December 2022.
ANZ has replicated NAB in that the big-four bank has not yet detailed any increases to savings account rates, instead noting they are constantly 'under review'.
ANZ Group Executive Australia Retail Maile Carnegie said with increases in the cost of living and rate changes across the year some of our customers may be feeling greater financial pressure.
"If customers are facing difficulties, we urge them to reach out to ANZ as early as they can to discuss tailored options to support them and their circumstances," Ms Carnegie said.
The last of the major banks to respond to the RBA's December decision was Australia's largest bank, with CommBank detailing it will pass on the 0.25% p.a. increase to variable rate home loans from 16 December 2022.
Unlike NAB and ANZ, CommBank will also pass on the RBA increase to savers, with NetBank Saver, GoalSaver and Youthsaver increasing by up to 0.60% p.a.
CommBank Group Executive of Retail Banking Angus Sullivan said CommBank continues to support customers facing cost of living pressures through online budgeting tools, discounts on everyday shopping essentials, and by again lifting the savings rates.
“We have helped customers save in excess of $22 million when they shop using our cashback program, CommBank Rewards, in the CommBank app," Mr Sullivan said.
"Millions of CBA customers have engaged with our shopping offers, with close to 75 per cent of redemptions over the last quarter being claimed on everyday essential purchases including grocery, fuel, food, pharmacy and pet supplies."
Mr Sullivan further noted CommBank would be extending its free, three-year nbn plan for home seekers for a further six months.
Need somewhere to store cash and earn interest? The table below features savings accounts with some of the highest interest rates on the market.
Savings Maximiser (<$100k)
|No monthly fees|| |
Image by CBA, ANZ, NAB & Westpac
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