Australian banks lift interest rates

The Australia's four largest banks have all increased their mortgage and savings account interest rates following the Reserve Bank of Australia's decision to raise the cash rate to a 18-year high of 4.85 percent. This rate hike was implemented to combat persistent inflation in the country's economy.

The new interest rate increases will commence from mid-November. Variable mortgages will be affected as banks apply higher interest rates in response to the RBA's decision.

RBA governor Michele Bullock explained that the rate increase would make people feel poorer and limit spending growth due to stagnant incomes. The cash rate, set by the RBA, is the official interest rate charged on unsecured overnight loans between banks.

Macquarie Bank was the first to react, notifying customers that it would raise interest rates across its variable-rate home loan products by 0.25 percent within an hour of the RBA's announcement. Following this, the major banks all announced they would increase their variable home loan rates by 0.25 percent.

This 0.25 percent per annum increase will raise monthly repayments by approximately $79 on a $500,000 variable home loan for an owner occupier with principal and interest repayments, according to ANZ. Westpac, NAB, ANZ, and CBA will apply the new rate from November 13.

The banks have advised that customers experiencing financial strain should reach out to their bank immediately. Those with money in the right savings accounts will benefit from earning more interest when banks lift their rates in the middle of the month. However, Canstar, a comparison site, revealed that banks often require customers to meet specific conditions before they can access the highest rates on offer. If those conditions are not met, customers may revert to a base rate of around 0.10 percent.