Westpac the first of big banks to hike rates following June RBA decision

Not long after the Reserve Bank of Australia's decision to lift official interest rates by half a percentage point, Westpac announced it will be passing on the full hike to its variable rate customers.

Effective 21 June, the major bank’s variable rates will increase by 0.50% for both new and existing customers. This will take its Rocket Repay Home Loan (P&I, OO) to 5.33% p.a. (5.47% p.a. comparison rate*).

Westpac consumer and business banking chief executive, Chris de Bruin said most customers had taken steps to safeguard their finances throughout the pandemic period, so higher rates should not deal too large a blow.

“We know a change in interest rates affects every budget differently. Our customers have managed their finances carefully during the pandemic, with many putting more funds aside in their savings and offset accounts,” he said.

“This means the majority of our customers are ahead on mortgage repayments and have a buffer available to help them manage an interest rate increase.”

Westpac will also be introducing a 12 month term deposit rate of 2.25% p.a. to help customers grow their savings. At the time of writing, the bank’s remaining term deposit and savings account products are still under review.

Those concerned about managing their home loan repayments are encouraged to reach out to Westpac for help. Oftentimes, this might mean restructuring or consolidating debt, reducing repayments to the minimum monthly amount, or deferring repayments altogether.

“For customers who need some extra help or who are in financial difficulty, we have our specialist teams standing by who will work with them to tailor a financial solution to meet their needs,” de Bruin said. 

“We encourage customers doing it tough to call us as soon as possible.”

RBA eager to normalise interest rates

After keeping its accommodative monetary policy settings in place for more than a year, the RBA finally bit the bullet and raised interest rates in May by 0.25%.

It followed that decision yesterday with a bumper 50 basis point hike — the largest single increase to the cash rate in more than 20 years.

Westpac’s announcement makes it the first of the big banks to respond to the RBA’s decision. In May, it was Commonwealth Bank that first notified customers it would be raising variable rates in line with the RBA.

RELATED: Which banks have increased home loan rates in June?

At the time, the rest of the market moved in near lockstep, with 77 of the 95 lenders we track passing on May’s rate rise in full. Meanwhile, 12 raised rates only partially while six have yet to announce any changes. 

To see how your repayments might change under rate rises of various sizes, use our rate change calculator. And if you’re thinking of switching, visit our home loan comparison page, or browse the selection below.