Last week, the standard variable interest rates (SVR) were increased by NATIONAL Australia Bank (NAB) and Westpac, mirroring the actions of their competitors, with hikes reaching up to 43 basis points.
Westpac, being the final major bank to implement rate adjustments, raised its rates by 35 basis points to a new level of 7.86 percent.
This modification results in an addition of approximately $56 to the typical home loan of $250,000.
Rob Coombe, the head of retail and business banking, stated that this decision stemmed from the bank’s increasing average cost of funding, which had a negative impact on its net interest margin by 19 basis points in the financial year 2009/10.
“In this context, our interest rate decision has not been taken lightly,” he expressed in a statement.
“We have carefully balanced the varied interests of all our stakeholders, including depositors, home loan customers, shareholders, and staff, acknowledging our duty to maintain a sustainable bank for those stakeholders.”
He noted that Westpac’s SVR served as its reference rate and emphasized that the bank could assist customers in exploring various options, such as discount offers and dividing mortgages between fixed and variable rates.
According to the bank’s statement, interest rates on deposits are set to rise by at least a quarter of a percent.
Westpac announced that the rate adjustment would take effect starting Tuesday.
Earlier today, National Australia Bank announced an increase of 43 basis points in its SVR, raising it to 7.67 percent.
Interest rates on NAB’s business loans will also experience a 43 basis point increase, per the bank’s statement.
NAB indicated that deposit interest rates would go up by a range of 25 to 100 basis points.
These rate increases will become effective on Monday; however, NAB has yet to disclose modifications to interest rates from its Homeside division.
Additionally, NAB followed ANZ’s lead by abolishing its $900 early exit fees for both new and existing home loans, effective from December 6.
On Wednesday, ANZ announced it would eliminate its $700 exit fee and increase its standard variable rate (SVR) on home loans by 39 basis points to 7.8 percent.
Westpac has yet to clarify whether it will eliminate its $700 exit fee, but it did mention a reduction of its three-year fixed home loan rate by 40 basis points to 7.09 percent.
The Commonwealth Bank (CBA) has remained silent regarding its $700 exit fees.
Last week, the bank faced widespread public backlash after raising its SVR significantly, nearly doubling the Reserve Bank of Australia’s hike of 25 basis points to the official cash rate.
Currently, CBA’s SVR stands at 7.81 percent.
NAB cited the increasing average cost of funds, driven by higher wholesale funding costs and deposit expenses, as the reason for its rate hike.
The statement indicated that the average cost is likely to keep rising in the foreseeable future.
It also mentioned that the bank had been absorbing these additional costs but acknowledged that doing so indefinitely is not feasible.
“NAB will continue to absorb a substantial portion of its elevated average funding costs,” the statement concluded.
Since the Reserve Bank’s increase in November, nineteen lenders have raised their SVR.
