CBA raises rates by almost double the RBA

The Commonwealth Bank (CBA) has sparked outrage by raising its standard mortgage rate by almost double the Reserve Bank's (RBA) official increase.

CBA opted to raise its rate by 45 basis points, becoming the first to follow the RBA after its official hike of 25 basis points today (November 2nd).

The move means that CBA's variable home loan interest rate will now be 7.81 per cent from November 5th.

While the bank defended the move with reference to higher funding costs, federal treasurer Wayne Swan reflected public anger by describing it as "a cynical cash grab".

"I think Australians deserve a lot better … it's no wonder Australians are so angry with our banks after watching the behaviour of the Commonwealth Bank," he said.

Mr Swan added that the government would now look to implement further measures for promoting greater competition in the banking system, but warned that there was no instantaneous solution to the problem.

Independent rate hikes by the major banks could prompt more borrowers to compare home loans and consider refinancing. Last week, opposition treasury spokesman Joe Hockey called for new measures for use against banks which continually raise rates above the RBA's cycle, though the government was quick to dismiss his proposals as unworkable.

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