The Reserve Bank of Australia raised the cash rate by a quarter of a percentage point to 4.6%, The Nightly reported, the highest level in 15 years. Commonwealth Bank, Westpac, NAB and ANZ each passed on the full rate increase to home loan customers, with higher charges taking effect.
No big-four bank home loan variable rate now starts with a 5. The cheapest variable rates across the majors are Westpac 6.24%, NAB 6.29%, Commonwealth Bank 6.34% and ANZ 6.50%. Canstar data insights director Sally Tindall described the outlook as harsh for borrowers with large debts, as their rates could soon start with a 7.
Canstar calculated that four rate rises during the year had added $364 to monthly repayments on a $600,000 mortgage with 25 years remaining as of February. Higher interest charges apply immediately after the rate rise, though minimum repayment amounts may not increase for another two to three months. The RBA made its September rate decision on 29 September and has indicated it may tighten further if inflation does not fall sufficiently.
Savings accounts are also responding to the rise. Eligible customers holding Westpac's young adult Life account can earn 5.95%, while Commonwealth Bank's GoalSaver and NAB's Reward Saver sit at 5.25%. Bank of Queensland's top rate is limited to customers aged 14 to 35, and Newcastle Permanent's comparable deal is for customers under 25, with both requiring monthly conditions.
Without monthly requirements, savers can earn 5.50% from AMP on balances up to $50,000, while ING leads with 6.25% for the first four months before dropping to 5.65%. NAB and ANZ customers who miss monthly bonus conditions receive as little as 0.01% interest, while Westpac and Commonwealth Bank pay 0.10%.
Borrowers with the big four face higher interest charges immediately, though minimum repayment amounts may not rise for another two to three months. Savers who do not meet monthly account conditions earn minimal interest, meaning higher rates benefit only those who actively track and meet eligibility requirements each month.
Reporting: The Nightly, The Motley Fool Australia
Written by Pick & Scroll News from the reporting and documents linked above.
