Banks Not Passing Latest Mortgage Rate Hike to Customers Revealed
Recent increases in mortgage rates have raised concerns among borrowers in Australia. The Reserve Bank of Australia (RBA) recently hiked the cash rate to 3.85 percent, prompting speculation about how quickly banks will pass this increase onto their customers.
Banks’ Response to Rate Increases
Historically, banks have acted swiftly to implement rate hikes, often before waiting for the RBA’s guidance. This trend contrasts sharply with their behavior during rate cuts, where many banks delayed passing on the full benefit to consumers.
The Impact of the Cash Rate Hike
- The current cash rate is now at 3.85 percent.
- Consumer research head Graham Cooke from Finder notes that major banks typically pass on full rate increases immediately.
- In previous years, banks were less likely to pass on complete reductions when the RBA lowered rates.
In 2019 and 2020, during a series of rate cuts, the Big Four banks often retained portions of the savings instead of passing them on fully to customers. However, by 2025, they finally complied, driven by external pressures such as the rising cost of living.
Reasons Behind the Quick Rate Hikes
Banks defend their rapid rate increases by citing their funding costs and obligations to shareholders. This situation has placed borrowers with variable rate loans at a disadvantage, as they face increased financial strain during periods of rising interest rates.
Current Market Overview: Lenders and Rates
As banks adjust their rates, the competition for mortgage products remains fierce. Borrowers are encouraged to review their options regularly to ensure they are not missing out on better deals.
Best Rates from Various Lenders
| Lender | Best Rate (%) |
|---|---|
| AMP | 5.43 |
| ANZ | 5.50 |
| CommBank | 5.39 |
| NAB | 5.69 |
| Westpac | 5.34 |
The rates listed are for 80% LVR owner-occupier loans, paying principal and interest. Borrowers should remain informed about any changes in their lender’s rates and consider switching if necessary.
Conclusion
As banks adjust their mortgage rates in response to the latest cash rate hike, borrowers must stay vigilant. Understanding the landscape and being proactive can help mitigate the financial impact of rising rates.
