Variable rate customers who have their mortgage with Westpac and some of their subsidiaries will be forking out an average of $35 extra per month and $420 per year, after the bank hiked rates by 14 basis points.
Westpac has become the first of the big four banks to hike out-of-cycle with the RBA, after sustained cost of funding pressures.
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RateCity research director Sally Tindall said Westpac had held out longer than the market expected before caving into the pressure to hike rates.
“Westpac has today asked their variable rate home loan customers to help ease their cost of funding pressures.
“While banks are entitled to make a profit, some Westpac home loan customers will be disappointed with the bank’s decision to increase their interest rate.
“Most households will be able to absorb the rate hike, however anyone who overstretched to get in the market will feel burdened by this extra cost.
“Now that Westpac has hiked, taking the brunt of the bad PR, we expect the other three banks to follow suit.
“If your lender hikes your interest rate, it’s the perfect time to start considering your options.
“Ironically the banks are desperately seeking out customers to boost their lagging profit margins. They’re doing this by offering rock bottom rates, but only to new customers so if you’ve got a bit of equity in your home, now is a great time to consider refinancing,” she said.