Westpac joins mortgage hike trend

It has become the first big Australian lender to raise its rates.

Bloomberg reports that Westpac has raised its key mortgage rates by 14 basis points to 5.38%, in a move that makes it the first of Australia’s Big 4 the first to pass on higher funding costs.

The move comes after short-term domestic funding costs hit a two-year high last quarter, prompting around 16 other smaller banks to raise home loan rates earlier.

Also read: Will mortgage rate hikes boost Australian banks' bad loans?

“We now believe wholesale funding costs will remain high for the foreseeable future,” said George Frazis, head of Westpac’s consumer bank. “Given the step change in our funding costs, we have made what we believe is the appropriate decision: to balance the interests of all of our stakeholders.”

On the other hand, Australia and New Zealand Banking Group cut its variable mortgage rate by 34 basis points to 3.65%, days after Commonwealth Bank of Australia (CBA) lowered some of its fixed mortgage rates by 10 basis points in an attempt to wrestle their market share from smaller competitors.

Together with NAB, the Big 4 control around 80% of the country’s home loan deposit market.

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