Big Four Banks Move To Raise Interest Rates By More Than Central Bank Inevitable
As three of Australia’s Big Four lenders have yet to announce their interest rate policy in response to last week’s 25 basis point rate hike by the Reserve Bank of Australia, speculation is mounting that they will all move to raise their interest rates above the official tightening in interest rates.
So far neither Westpac, NAB or ANZ have made announced their intention to follow the lead by CBA, which hiked its interest rates by 45 basis points less than 2 hours after the central bank announced its decision to tighten interest rates last Tuesday.
CBA’s 45 basis increase in its lending rate is nearly double the official hike in interest rates, and its decision to do so, has been the subject of intense political and consumer criticism of the banking industry, which many analysts believe has resulted in CBA’s big four rivals holding off on announcing their interest rate decisions.
The current paralysis is the longest time lenders have held off on lifting their mortgage lending rates following an official interest rate hike since the mid 90’s, when they faced flak for closing branches and cutting jobs. Back then the banks were attempting to win back both consumer and political favour by not raising rates instantly, or passing on official hikes in interest rates to their customers in full.
Despite their holding off on lifting interest rates for now, it is inevitable that Westpac, NAB and ANZ lift their interest rates over and above the central bank increase.
The majority of smaller regional lenders and non bank financials have all raised their key lending rates over the last week and an analysis of those moves suggest that smaller lenders have capped their increases at the same level as the central bank.
Non bank financials such as building societies appear to have lower mortgage lending rates than those of the Big Four, which control more than 75 per cent of the Australian mortgage lending market.
The analysis showed the average standard variable rate in Australia is now 7.09 per cent, based on statistics from 100 lenders.
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