Big banks set to make multi-million dollar profits from recent rate hikes
All four of Australia’s big banks have now made increases to their variable home loan interest rates, ranging from as low as a 0.03% increase for owner-occupiers, to a hefty 0.25% hike for investors. And as the dust settles, Mozo data has revealed that each bank stands to make millions of extra dollars from the hikes.
NAB was the first big bank to make changes, raising variable interest rates by 0.07% for owner-occupiers, and a whopping 0.25% for investors.
Westpac soon followed, with a lower increase of 0.03% for owner-occupiers, and 0.23% for investors. Those changes saw the two big banks set to net an extra $347 million and $450 million respectively.
Next, ANZ announced 0.25% increases to investor loans only. So while owner-occupiers with ANZ dodged the rate hike bullet, the bank is still set to bag an extra $302 million profit.
Commonwealth Bank was the last to come to the rate hike party, with an 0.24% hike for investors, and a deceptively mild 0.03% increase for owner-occupiers.
Despite these mid-range increases, CommBank is set to profit the most from the recent rate hikes, with Mozo data predicting a $608 million extra earn in interest.
How much more will the big banks earn now?
But while the banks are enjoying bumper profits, borrowers are getting the short end of the stick.
On a $300,000 home loan, CBA and Westpac customers stand to pay around $5,000 more in interest, while NAB customers will now pay as much as $11,000 more in interest over the life of a 30 year loan.
How much more will my home loan cost?
Interest only loans were generally subject to steeper rate hikes, so for customers hoping to avoid the worst of the damage, big banks are recommending customers switch to principal and interest repayments.
Another option is refinancing your mortgage and choosing a low rate loan from one of the other banks in the Australian market. You can head over to our home loan comparison tool to find the best deal for your buck.