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Banks begin to pass on rate hike to customers

The big four banks have passed on the central bank’s rate hike for May, as mortgage holders brace for higher repayments.*

Following the Reserve Bank of Australia’s (RBA) surprise decision to increase the official cash rate to 3.85 per cent, all major banks - National Australia Bank (NAB), Westpac, ANZ and the Commonwealth Bank (CBA) - have announced they will be passing on the 25 basis point bump to customers.

AMP Bank and Macquarie have also announced they will be passing on the rate hike.

ANZ and NAB to increase from 12 May

ANZ and NAB will both increase variable interest rates across Australian home loans by 0.25 per cent per annum, effective 12 May.

ANZ said it would also increase the rate available to savings customers on the ANZ Plus Save account for balances less than $250,000 by 0.25 per cent p.a. to 4.50 per cent p.a., effective 11 May.

NAB will increase rates for selected savings products, including the NAB Reward Saver bonus interest rate and the NAB iSaver introductory and standard variable rates.

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NAB Reward Saver bonus interest rate will increase by 0.25 per cent p.a., bringing the total bonus interest rate to 4.50 per cent p.a, while NAB iSaver introductory and standard variable rates will both increase by 0.25 per cent p.a. to 4.50 per cent p.a. and 1.85 per cent p.a., respectively.

NAB group executive personal banking, Rachel Slade, emphasised that the bank is committed to assisting customers who may be concerned about their financial position following the rate hike.

“There may be some customers who are concerned about their financial position, and we are here to help,” Ms Slade said.

Similarly, ANZ’s group executive Australia retail, Maile Carnegie, said the bank has tools available to help customers understand these changes and manage their home loans.

Westpac lifts interest rates and savings

In addition, Westpac announced that it will increase its home loan variable interest rates by 0.25 per cent for new and existing customers, effective 16 May.

The bank has also increased its savings rate by 0.25 per cent.

The Westpac Life total variable rate with bonus interest will increase by 0.25 per cent p.a. to 4.50 per cent p.a., effective 12 May, while the eSaver total variable rate will increase by 0.25 per cent p.a. to 4.50 per cent p.a. for new customers for the first five months, effective 12 May.

Commonwealth Bank drops 3-yr fixed rate

CBA was the last, out of the majors, to announce it will lift its home loan variable interest rates and savings rates by 0.25 per cent p.a., effective 12 May. However, dropped its three year fixed rate home loan, noting the financial pressure on mortgage holders. 

Group executive retail banking Angus Sullivan said: “To provide more certainty for home loan customers following increases in the RBA cash rate, we recently reduced our Three Year Fixed Rate home loan interest rate, which may appeal to customers seeking to manage their future home loan repayments while cost of living pressures are rising.”

"The Three Year Fixed Rate home loan for owner occupiers paying principal and interest repayments, reduced by 0.40 per cent p.a. to 5.59 per cent p.a., within package, with a comparison rate of 7.20 per cent p.a., effective as of 14 April 2023."

The bank's NetBank Saver will increase to 4.50 per cent p.a., comprising a standard variable rate of 1.95% p.a. and fixed bonus margin of 2.55% p.a; the
Youthsaver will increase to 4.50 per cent p.a; as well as its GoalSaver, which will lift to 4.40 per cent p.a. 

AMP Bank and Macquarie lift interest and deposit rates

Non-major lender AMP Bank has moved much more quickly on the rate rise.

AMP Bank will lift variable rate home loans by 25 basis points for new customers from today (5 May), and from Monday (8 May) for existing customers.

The bank will also pass on rate rises for several savings and deposit products, including a 0.45 per cent p.a. increase for the standard rate of existing AMP SuperEdge Saver customers effective 8 May 2023, with eligible customers being able to earn up to 4.50 per cent p.a.

AMP Notice products will also see a 0.25 per cent p.a. increase effective 8 May 2023, while cash account rates offered to investment clients through AMP wealth platforms will increase by 0.25 per cent p.a. effective 8 May 2023.

Meanwhile, Macquarie has announced it will increase its variable home loan by 0.25 per cent p.a., effective 19 May 2023, alongside a range of its savings products.

Macquarie’s savings account welcome rate is increasing by 0.25 per cent p.a. to 5.05 per cent p.a. for new customers, for the first four months on balances up to $250,000, effective 9 May 2023.

As interest rates rise, banks are encouraging customers who are struggling to make higher repayments to reach out for help and explore options, such as pausing or reducing payments.

Several have budgeting tools available to assist customers in managing their finances and are also actively reaching out customers who may need additional support.

[Related: Has the RBA gone too far]

*This story was updated on 5 May after CBA announced its rate rises.

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