CBA & NAB Both Raise Interest Rates

Post by Sharat on December 4, 2009 · Under Australian Economy, Business News, Company News, banking, home loans, interest rates, mortgages · Comment

CBA has followed the lead taken by rival Westpac and increased its variable rate mortgage interest rates by greater than the central bank hike, paving the way for ANZ the only Big Four lender yet to announce a decision, to follow suit.

CBA raised its variable mortgage rate by 37 basis points representing an increase of 12 basis points in excess of the Reserve Bank of Australia’s 25 basis point rate hike.

Currently only National Australia Bank (NAB) has raised its interest rates in line with the central bank, with most analysts expecting ANZ to raise its rate by 10 basis points above the rise in official interest rates.

CBA cited higher wholesale funding costs as the reason for its decision and a spokesperson for the bank said in a statement “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. 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.”

CBA, which has the largest depositor base in Australia also announced that it would also increase deposit rates on a range of accounts, including its online Netsaver account by up to 50 basis points.

Cameron Clyne, chief executive of NAB said his decision to raise rates in line with the central bank’s move was driven by his commitment to change the relationship the lender has with its retail customers.

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