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RBA interest rates: ANZ joins Commonwealth Bank in passing on full 0.50 percentage point rate hike

ANZ followed Commonwealth Bank’s lead in passing on the full 0.50 percentage point hike to its customers.

The big bank made the decision just hours after its rival said it would pass on the hike to variable rate mortgages and a savings account by 0.50 percentage points.

ANZ’s increased mortgage rates will be effective for new and existing customers from Friday 12 August.

The lowest floating rate will now be raised to 3.69%, just below that of the CBA, which raised its lowest rate to 3.79%.

Both rates are at three-year highs.

ANZ’s decision also included raising the rate on its new ANZ Plus Save account by 0.50 percentage points to 2.50% for balances up to $250,000, which will take effect on Monday.

The move comes just hours after Australia’s largest bank, Commonwealth Bank, announced it would pass on the full 0.50 percentage point hike to its variable home loan customers and some savings customers.

The CBA will raise the standard rate for variable home loans to 5.8% for principal and occupier interest.

Unusually, Australia’s other big banks were slow to exit blocks after the RBA’s decision on Tuesday, with CBA rivals Westpac, NAB and ANZ yet to make announcements.

Mortgage rates for new and existing CBA customers will increase by 0.50 percentage points on August 12, with investor rates rising to 6.38%.

RateCity.com.au research director Sally Tindall said while the ABC’s decision comes as no surprise, for customers already feeling the heat, this fourth hike is a “tough pill to take”. swallow”.

“Starting next week, the ABC’s base variable rate will hit a three-year high of 3.79% – a huge increase from three months ago, when it was just 2.19%,” she said.

For a homeowner with $500,000 in debt and 25 years remaining, the 0.5 percentage point increase means they will see their monthly repayments increase by $140.

To ease the pressure, Commonwealth Bank cut its lowest four-year fixed rate to 4.99%, a cut of 1.60 percentage points.

This special rate, which kicks in Friday, is strictly for homeowners who pay principal and interest on a package ($395 annual fee) for a limited time.

While Ms Tindall said the ‘huge cut’ would make it the lowest in its class, she warned it might not necessarily be a good idea.

“People should think carefully about whether they want to lock in their mortgage for the next four years because there can be significant consequences if they decide to break their loan,” she said.

For those with a NetBank Saver account, who will see the full rate hike, the research director said a going rate of just 0.85 still wouldn’t be enough.

“In this market, where we might see ongoing rates above 3%, these savers are still being paid like peanuts,” she said.

But Ms Tindall said there were signs things could be changing.

“On Tuesday Macquarie announced it was making significant cuts to its fixed rates and now CBA is following suit,” she said.

“We expect this to trigger further fixed rate cuts from other lenders in response to both changing market expectations and competition among banks.”

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