Commonwealth Bank of Australia (ASX: CBA), Australia’s largest bank, has just announced that it is increasing variable interest rates by 0.15% for all Australian residential property owners effective 4 October 2018.
The announcement came minutes after Australia and New Zealand Banking Group (ASX: ANZ) announced it was increasing its own variable interest rate by 0.16%.
Angus Sullivan, Group Executive Retail Banking Services Commonwealth Bank, said:
“We have made this decision after careful consideration. We are very conscious of the impact that increasing interest rates will have on our customers, however it is important that we price our home loan products in a way that reflects underlying costs.”
Commonwealth Bank and other Australian banks are blaming an increase in the bank bill swap rate. Most Australian banks get loan funding from overseas wholesale markets.
The US Federal Reserve is steadily raising interest rates and this is increasing funding costs for every borrower of US dollars, including Aussie banks. This is an issue Rask Media first raised a few months ago in this article: Westpac & CBA Could Be Forced To Raise Interest Rates.
This announcement means that National Australia Bank Ltd
(ASX: NAB) is the only major bank not to have increased rates, which is now expected to follow suit.
Commonwealth Bank encouraged homeowners to consider switching to a fixed rate loan with a lower interest rate.
For homeowners, it seems like there’s never been a better time to shop around.
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