Jump to content
  • Sign Up
Carol from Vista Financial

Westpac rates increasing... will the others follow suit?

Recommended Posts

So late yesterday (after I finished my other post, naturally) Westpac announced it will be increasing rates by 0.14% p.a. quoting increased wholesale funding:

In particular the bank bill swap rate, which is a key wholesale funding rate for mortgages, increased by about 25 basis points between February and March this year and has remained elevated.
“We initially hoped that this increase would be temporary, and therefore we have incurred these costs over the last six months. The rate changes announced today will not recover these costs..."

- Official Westpac Media Release, 29 August 2018

I.e we didn't increase them then, but we are now, and not by the full amount needed cover costs. Interpret that as you may.

So the big question is when/if this will cause a domino effect with the other big banks? There have been rises in smaller banks but none of the big four, perhaps due to the target already firmly on their backs as a result of the Royal Commission. Will they follow suit hoping that Westpac will take the first wave of anger and disapproval? Or will they stand fast in an effort to claw back a little customer sentiment? (Along with some nicely crafted marketing giving themselves a cheeky gold star of course). No doubt we will find out shortly.

Bottom line, the only real way to guarantee your rate and repayment is to be on a fixed rate, but they come with restrictions - so do you homework first to see if it is right for you.

As I have already mentioned elsewhere rates are so low at the moment that when they eventually go up again it will be a shock to the system for many that have only ever known low rate environments. So prepare yourselves. Those of the era of double-digit interest rates know what I mean. The RBA knows it too and have flagged rising rates as something to prepare for. Some economists now argue this recent move by Westpac (and potentially by others) may now delay any increase decisions by the RBA.

Time will tell.

Share this post


Link to post
Share on other sites

ANZ increases their rates first, CBA follows a few minutes later

CBA increase by 0.15%

ANZ increase by 0.16%

You can read their media releases here:

CBA announcement

ANZ announcement (note here they have advised that those people living in postcodes they have deemed as drought affected will also have an equivalent increase in a discount - which means they don't escape the base rate rise, but are given a discount of the same 0.16% so they aren't impacted)

No word on NAB just yet.

Share this post


Link to post
Share on other sites

Sadly, more often then not the little man does get trampled @scooterdan

Other lenders have actually also increased rates, but due to the sheer market share of the Big 4 they do certainly take the spotlight, particularly in conjunction with annual profit announcements, albeit lower than they were hoping for.

Seems NAB are taking advantage of the situation here though...

As you may have heard already there has been no move by NAB to increase their rates - their media statement saying they are holding them for now in an effort to 'rebuild customer loyalty'.

Is this the case or are they just being opportunistic in an effort to capture market share? If they do eventually move rates to account for increased funding costs like the others, are they merely setting themselves up for a bigger fall from a moral high ground? I think their marketing team will have to prove their worth and really pull a rabbit out the hat if/when they do increase them.

  • Like 1

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Similar Content

    • By Carol from Vista Financial
      Hi all
      Bit behind the 8 ball and catching up on some posts after a few busy weeks. A lot happening in the mortgage market with rate moves, refinance offers, lending policy changes, the Banking Royal Commission interim report released and more!
      First things first - the RBA.
      Last week to no ones surprise the RBA left rates on hold again:
      "In Australia, money-market interest rates are higher than they were at the start of the year, although they have declined since the end of June. In response, some lenders have increased their standard variable mortgage rates by small amounts, while at the same time reducing mortgage rates for some new loans.
      ...Conditions in the Sydney and Melbourne housing markets have continued to ease and nationwide measures of rent inflation remain low. Growth in credit extended to owner-occupiers remains robust, but demand by investors has slowed noticeably as the dynamics of the housing market have changed. Credit conditions are tighter than they have been for some time, although mortgage rates remain low and there is strong competition for borrowers of high credit quality."
      Full release can be read here
      More on the rest soon, watch this space!
    • By Carol from Vista Financial
      No change again, rate remains on hold:
      "Conditions in the Sydney and Melbourne housing markets have continued to ease and nationwide measures of rent inflation remain low. Housing credit growth has declined to an annual rate of 5½ per cent. This is largely due to reduced demand by investors as the dynamics of the housing market have changed. Lending standards are also tighter than they were a few years ago, partly reflecting APRA's earlier supervisory measures to help contain the build-up of risk in household balance sheets. There is competition for borrowers of high credit quality." 
      - Statement by Philip Lowe, Governor: Monetary Policy Decision, 4th September 2018
      But as we can see from this past week, this is only one factor used by lenders in determining whether or not to move on rates. Is it to cover cost of wholesale funding or to recoup upcoming fees for civil penalties? Watch this space.
      Full release by RBA available here.
    • By Carol from Vista Financial
      Westpac admits to breaching responsible lending obligations and now up for a $35 million civil penalty:
      "If approved by the Federal Court, this will represent the largest civil penalty awarded under the National Credit Act."
      - recent ASIC media release today 4th September 2018
      Read the full ASIC media release here.
    • By Carol from Vista Financial
      Low and behold, at its meeting today, the Board decided to leave the cash rate unchanged again at 1.50 per cent.
      Some interesting parts of the media release, or you can read the full version here:
      "In Australia, money-market interest rates are higher than they were at the start of the year, although they have declined somewhat since the end of June. These higher money-market rates have not fed through into higher interest rates on retail deposits. Some lenders have increased mortgage rates by small amounts, although the average mortgage rate paid is lower than a year ago."
      Indeed, some lenders have started to creep up mortgage rates slightly quoting higher costs - the true reasons for doing so is anyone's guess, as they are unfortunately able to alter rates independently of any RBA decision. An old abandoned interest earning account is still at 0.01%, however.
      "Conditions in the Sydney and Melbourne housing markets have continued to ease and nationwide measures of rent inflation remain low. Housing credit growth has declined to an annual rate of 5½ per cent. This is largely due to reduced demand by investors as the dynamics of the housing market have changed. Lending standards are also tighter than they were a few years ago, partly reflecting APRA's earlier supervisory measures to help contain the build-up of risk in household balance sheets. There is competition for borrowers of high credit quality."
      Tightening in lending criteria is certainly evident as the industry rushes to ensure compliance as auditors and regulators get the fine tooth comb out. Quite heavy in the investment lending side of things yes, but for owner occupiers or those moving into investment properties, be prepared to show the bank proof that you actually live there. A few lenders have started to enforce this for any product switches; what suffices for evidence varies between lenders.
      Speaking of big brother, keep an eye out for random acts of 'kindness' from your super company as Round 5 hearings of the Royal Commission looks at the super industry. What a pleasant surprise that my super company refunded me some administration fees they 'accidentally' charged... "Sorry we robbed you - here, have it back".
      And last but not least from the RBA media release:
      "One continuing source of uncertainty is the outlook for household consumption. Household income has been growing slowly and debt levels are high. The drought has led to difficult conditions in parts of the farm sector."
      The impact of drought or any other financial hardship can be massive on those families affected by it.
      When you are scraping for pennies everything else is also just that little bit harder.
      If you are affected by drought or struggling with money call your bank and ask to speak to the Hardships Team. Every lender has one - ask how they can help.
      Or, call the National Debt Hotline 1800 007 007 or research your options - Money Smart has some great information here.
      And of course, please look after your health, mental and physical. If you or someone you know is struggling financially it is ok to ask for help.
      https://www.lifeline.org.au/get-help/topics/financial-problems
×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Use