The Commonwealth Bank of Australia has joined Westpac and Macquarie Bank in increasing mortgage rates by 0.5 percentage points, as it passes on the Reserve Bank\u2019s latest rate rise to customers in full.<\/p>\n
In a statement, the CBA\u2019s retail banking services group executive Angus Sullivan said the new home loan variable interest rates will take effect on June 17.<\/p>\n
\u201cWe are here to support Australian households who may be concerned about their home loan repayments,\u201d he said. \u201cWe encourage customers to contact us to discuss the options available to them including ensuring offset accounts are set up and linked to their eligible home or investment loan.\u201d<\/p>\n
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The Reserve Bank increased the cash rate by 0.5 percentage points on Tuesday afternoon. <\/span>Credit:<\/span>Paul Rovere<\/cite><\/p>\n The Reserve Bank on Tuesday\u00a0announced a 0.5 percentage point rise in official interest rates, the biggest one-month increase in more than two decades, taking the cash rate to 0.85 per cent.<\/p>\n Westpac was the first major lender to increase mortgage interest rates on Tuesday night followed by Macquarie Bank.<\/p>\n CBA also announced it would increase the bonus interest rate for several of its savings products by 0.5 per cent, and extend the availability of its 18-month term deposit offer of 2.25 per cent.<\/p>\n \u201cIt has been a challenging time for many savers who have experienced a long period of record low interest rates,\u201d Sullivan said. \u201cWe hope these changes provide some much-needed support for our customers looking to save.\u201d<\/p>\n Westpac will lift variable home loan rates by 0.5 percentage points from June 21. It said it would also offer a one-year term deposit rate of 2.25 per cent and other deposit rates were under review.<\/p>\n RateCity said monthly repayments on an average new loan in NSW would lift by $208 as a result of the increase, while repayments on an average new loan in Victoria would rise by $169 a month.<\/p>\n The Reserve Bank warned there would be further rate rises to come and analysts are predicting another 50 basis point rise in July, which would take the cash rate to 1.35 per cent.<\/p>\n Morgan Stanley economist Chris Read said Tuesday\u2019s rate hike was higher than most expected, with inflation risks driving a sharp change in messaging from the RBA. \u201cThe RBA is now clearly more centrally focused on inflation and willing to accept greater growth risks on its tightening path,\u201d he said.<\/p>\n He predicted a further hike of 50 basis points in July and August, and 25 basis points from September to November to bring the cash rate to 2.6 per cent by the end of the year.<\/p>\n Jarden\u2019s chief economist, Carlos Cacho, said the larger-than-expected rake hike was driven by the RBA upgrading its inflation and wages outlook, and being emboldened by the underlying strength in the economy. \u201cWhile we agree that a more aggressive path for rates is warranted by the inflation outlook, the rapid loss of momentum across the economy suggests some risk from this strategy,\u201d he said.<\/p>\n He said he expects the RBA to increase rates by 50 basis points in both July and August, with the cash rate reaching 2.5 per cent by the end of 2022.<\/p>\n The RBA\u2019s rate rise sparked a fall in bank shares which continued on Wednesday, as investors worried about the risk of higher bad debts.<\/p>\n Following the surprise move, Commonwealth Bank economists lifted their forecast for the cash rate this year and predicted a 0.5 percentage point cash rate increase in July, followed by a 0.25 percentage point move in August. CBA economists also said they would cut their forecasts for economic growth for 2022 and 2023.<\/p>\n The Market Recap newsletter is a wrap of the day\u2019s trading. <\/i><\/b>Get it each weekday afternoon<\/i><\/b>.<\/i><\/b><\/p>\nMost Viewed in Business<\/h2>\n
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