In the wake of the Reserve Bank of Australia’s (RBA) decision to raise the cash rates by 0.25 percentage, Westpac has announced that it will pass on the full cost of the increase to its customers.
Westpac said the higher rates would apply to both new and existing customers.
The interest rates on customers’ home loans will go up by 0.25% per year.
The bank said, in response to changing market conditions, it would continue to review home loan products and pass the full rate increase onto customers.
“When making these decisions, we take multiple factors into account, including the need to manage pricing changes in a sustainable way,” in an email to customers, the bank said.
Westpac is the last of the big four banks to lift rates following the RBA’s decision, with ANZ, NAB, and the Commonwealth Bank already increased their rates on October 14.
The RBA’s 0.25 percent rate hike was passed on by all four banks to their customers.
Chris de Bruin, Westpac Chief Executive of Consumer Banking, said Despite consistent rate rises, there has not been a spike in customers experiencing financial difficulty.
“Most of our borrowers are in good shape with more than two-thirds ahead of mortgage repayments, and no change in customers seeking financial support.”
“We understand that any increase in interest rates, particularly at a time when household budgets are under pressure, is difficult for customers.”
Westpac’s decision to pass on the full rate rise will no doubt add to the criticism, but the bank says it is necessary to maintain its “competitive position”.
With the cost of living rising and wage growth remaining sluggish, many families are finding it increasingly difficult to make ends meet.
The higher interest rates will only add to the pressure they are under, and could see more people falling behind on their mortgage repayments.
It is also likely to further hit consumer confidence, which has already taken a hit in recent months.
