ANZ, Westpac lift rates for mortgage, small business

ANZ and Westpac increased interest rates for mortgages and small business by six and ten basis points.

ANZ explained that it had increased its standard variable mortgage rate to 7.36 per cent per annum, from 7.30 per cent, because it faced higher costs it was paying on $8 billion in long-term wholesale funding raised since October 2011.

It was ANZ that led the move among the big four Australian banks, followed by an even bigger rise from Westpac.

Westpac raised its SVR by 10 basis points or 0.1 percentage points, to 7.46 per cent, making it among the highest SVR of the big four banks

ANZ CEO Australia Philip Chronican said that his bank absorbed additional funding costs in December and January with the hope that funding pressures would ease and that there would be no need to change lending rates.

"However, margins in retail and business banking have now been squeezed for a number of months and we’ve taken the difficult decision to pass on part of the higher costs to customers while we also get on with taking action to reshape the bank for tougher times," Mr Chronican said.

Westpac group executive Jason Yetton said the rate hike reflected the increased cost to the bank of raising money.

"While we believe that reducing rates in November and December last year was the right thing to do for our customers and the economy, higher deposit costs and higher wholesale funding costs since then make today's move necessary," Mr Yetton said in a statement.

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