Banks lift interest rates, even with RBA on hold

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A range of lenders has made out-of-cycle rate hikes, blaming the interest rate rises on increased funding costs.

There have been increases of up to 15 basis points for Bank of Queensland, 13 points for Auswide Bank , 8 points for IMB Bank, 5 points for Heritage Bank and 10 points for ING – even though the Reserve Bank has left the cash rate at 1.50 per cent since August 2016.

Bank of Queensland increased home loan rates by:

  • 0.09 percentage points for owner-occupiers with a variable rate paying principal and interest
  • 0.15 percentage points for owner-occupiers with a variable rate paying interest-only
  • 0.15 percentage points for investors with a variable rate, regardless of repayment type
  • 0.10 percentage points for owner-occupiers with a line of credit
  • 0.10 percentage points for investors with a line of credit

“Funding costs have significantly risen since February this year and have primarily been driven by an increase in 30- and 90-day BBSW [bank bill swap] rates, along with elevated competition for term deposits,” Bank of Queensland said when announcing the decision.


Auswide Bank has also raised its mortgage rates, with increases of:

  • 0.05 percentage points for owner-occupied home loans
  • 0.13 percentage points for investment home loans
  • 0.13 percentage points for residential lines of credit

“Despite no increase in the official cash rate, we’ve had to make this difficult decision due to a sustained increase in 30- and 90-day BBSW levels,” Auswide announced.

“We are now paying significantly more for funding than we were six months ago, which this increase will help offset.”


IMB Bank has hiked its standard variable interest rates, with home loans increasing by:

  • 0.08 percentage points for owner-occupied mortgages
  • 0.08 percentage points for investment mortgages

“Like most banks, we use our customers’ deposits to fund the loans we make to our borrower members and we pay interest to attract and use these deposits,” IMB said.

“Over the last few months, the cost of this money has increased and as a result we are having to pass on some of this increased cost.”


Heritage Bank is another lender that has moved on interest rates.

The mutual bank said it had been forced to hike rates by 0.05 percentage points for most of its variable home loan products, effective from 2 July.

“The cost of securing the funds that we lend to our customers has grown steadily in recent times,” Heritage said.

“We’ve been absorbing those extra costs for as long as possible, but we now have no choice but to increase our variable rates slightly, so we can continue providing the same superior banking service for our customers.”


ING has also raised its mortgage rates, although just for existing customers.

In a statement, ING said it would increase its variable owner-occupied interest rates by 0.10 percentage points for “existing residential home loans”, effective 3 July.

“Please be advised that residential loan applications that settle after this date will not be subject to this increase,” the bank added.


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