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Date Published : Thursday, February 07, 2008
One of the largest financial institutions in Australia has raised the interest rates charged on variable home loans just a day after the Reserve Bank of Australia lifted the base rate to a 12-year high.
Commonwealth Bank responded to the news that the Reserve Bank decided to inflate the base rate by 0.25 per cent to seven per cent by increasing the rates charged on variable home loans by 0.3 per cent to 8.97 per cent.
However, the bank has also decided to pass on the increase to savers, raising interest on savings accounts to 6.75 per cent, from 6.5 per cent.
The bank has blamed the "continuing volatility in global markets" for the changes, which will take effect from February 8th.
Commonwealth Bank group executive Ross McEwan said: "As a result of increased funding costs experienced by all Australian banks since August 2007, we increased our standard variable rate by 0.1 per cent on January 9th 2008.
"At that time we indicated that we would continue to absorb much of the increased cost in the belief that wholesale funding rates would moderate. Regrettably this has not happened."
On Tuesday (February 5th), the Reserve Bank decided to increase the base rate of interest for a third time since August as a result of increased inflation which occurred at the latter end of 2007.
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