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Over 20 lenders have hiked home loan interest rates: is your bank on the list?

Over 20 lenders have hiked home loan interest rates: is your bank on the list?

On Tuesday, the Reserve Bank of Australia hiked the cash rate for the fourth consecutive month, lifting it by 50 basis points. Since then, several major lenders have announced they are passing this hike on in full.

The cash rate now sits at 1.85%, with the latest increase the third double-hike of 0.50% in a row. Millions of Australian home loan customers may be wondering how much this latest increase will hurt their household budgets, and if they can reduce the impact of higher rates.

Luckily, homeowners don’t need to sit and be complacent. There are steps you could consider taking today to give yourself a rate cut, or reduce your mortgage repayments.

Who has moved following this rate hike?

At the time of writing, 24 lenders have announced they are increasing interest rates for home loan customers.

Home loan lenderRate ChangeDate Effective
Commonwealth Bank of Australia0.50%11-Aug-22
Westpac0.50%18-Aug-22
NAB0.50%04-Aug-22
ANZ0.50%12-Aug-22
Macquarie Bank0.50%12-Aug-22
St.George Bank0.50%18-Aug-22
BankSA0.50%18-Aug-22
Bank of Melbourne0.50%18-Aug-22
ING0.50%09-Aug-22
Bank of Queensland0.50%09-Aug-22
MyState Bank0.50%15-Aug-22
Athena Home Loans0.50%04-Aug-22
Firstmac0.50%05-Aug-22
Virgin Money0.50%09-Aug-22
ME Bank0.50%06-Aug-22
loans.com.au0.50%05-Aug-22
Homestar Finance0.50%05-Aug-22
Bankwest0.50%12-Aug-22
Auswide Bank0.50%17-Aug-22
Bank of us0.50%05-Aug-22
Australian Unity0.50%12-Aug-22
AMP Bank0.50%12-Aug-22
Greater Bank0.50%10-Aug-22
Bendigo and Adelaide Bank0.50%12-Aug-22

Source: RateCity Rate Tracker. Data accurate as of time of publishing.

In the first two days following the RBA’s announcement of a cash rate increase, only one lender on the RateCity database, Macquarie Bank, had announced it was passing on the hike in full to its customers. This includes its savings account customers, with its Macquarie Bank Savings Account interest rate expected to rise to 2.25%.

This isn’t the first time that the big banks have delayed revealing when they will pass on a rate hike to customers. RateCity analysis shows that in 2010, following a 0.25% hike on 2 November, the big four banks took between eight and ten days to make their announcements.

Given this is the fourth consecutive monthly cash rate hike, and that the big bank’s economists predicted that the cash rate would increase by 50 basis points in August, this delay left many scratching their heads.

How much more you’re repaying thanks to higher interest rates

RateCity research has crunched the numbers on the latest cash rate increase to discover that homeowners on a 25-year, $500,000 home loan may be paying almost $500 more a month since April 2022.

If this homeowner was paying the RBA’s average ongoing owner-occupier variable home loan rate in April 2022 of 2.86%, and their lender passed on all four cash rate hikes in full, their interest rate would be 175 basis points higher, at 4.61%.

Impact of cash rate hikes: 25-year, $500,000 home loan

Starting monthEstimated repaymentDifference
Apr-22

$2,335

May-22

$2,400

$65

Jun-22

$2,532

$197

Jul-22

$2,667

$333

Aug-22

$2,807

$472

Source: RateCity.com.au, RBA Interest Rates, April 2022. Note: Does not factor in fees.

A homeowner on this $500,000, 25-year home loan would now be paying $472 more a month in mortgage repayments than prior to the first cash rate hike in May. This is the equivalent of buying a washing machine or new set of tyres each month.

How to give yourself a rate cut in 2022

There are steps that homeowners may consider taking today to help give themselves some relief come mortgage repayment time.

  1. Make extra repayments – If you have room in your budget amidst rising inflation, it may be worth making extra repayments on your home loan – if your lender allows this without penalty. Making additional repayments can help to lower your principal owing, which in turn should reduce your repayments and interest charged over time.
  2. Use your offset accounts – If your home loan offers you one or multiple offset accounts, the funds that you deposit into these accounts work to reduce the interest charged on your mortgage. This means you could be lowering your interest repayments while growing a nest egg.
  3. Negotiate your home loan rate – Many lenders offer new customers lower interest rates than their existing customers are paying. Colloquially called the ‘loyalty tax’, this is done to entice new customers to join with the lender. You may be able to pick up the phone and ask your lender to match this rate, or give you a rate reduction.
  4. Consider refinancing – If you’ve been repaying your home loan for some time and have built up a fair bit of equity, you may be in a good financial position to consider refinancing to a lower-rate home loan. Switching to a home loan with a lower interest rate, or even one with fewer fees and more features, may be one competitive option to reduce your mortgage repayments.

Compare refinance home loans

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This article was reviewed by Personal Finance Editor Georgia Brown before it was published as part of RateCity's Fact Check process.

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