Westpac moved quickly to increase its mortgage rates for new and existing customers, and RateCity research director Sally Tindall expected the other major banks to follow suit.
The bank’s standard variable rate has increased to 5.23 per cent from 4.73 per cent.
This will see a mortgage holder with a $500,000 loan paid over 25 years pay an extra $145 a month to service their loan.
What about savers?
The bank has also introduced a 12-month term deposit with a rate of 2.25 per cent from June 9 that’s 2 percentage points higher than its current 12-month term deposit rate.
Tindall pointed out that this rate was “by no means a market leader” and that it was “disappointing” to see the bank had not yet passed on the rate increase to any existing savings accounts.
Why interest rates are going up
RBA governor Philip Lowe said the bank was hiking rates to slow the rising cost of living.
“Global factors, including COVID-related disruptions to supply chains and the war in Ukraine, account for much of this increase in inflation,” Lowe said.
What can I do if I’m struggling to make my repayments?
With most banks expected to pass on higher interest rates, variable-rate mortgage holders can expect an increase to their repayments.
Many households will struggle to absorb higher repayments as they face higher cost of living and sluggish wage growth.
She said rates varied substantially between lenders, with the difference between the lowest variable rate and the highest variable rate about 1 per cent at the moment.