ANZ, NAB and Commonwealth Bank use Queen’s death to announce an increase in variable mortgage rates

ANZ, NAB and the Commonwealth Bank have used the cover of the Queen’s death to announce an increase in variable mortgage rates late on a Friday afternoon.

Three of the Big Four banks released statements as 14 Commonwealth nations, including Australia, mourned the death of their 96-year-old head of state.

They announced 0.5 percentage point increases to variable mortgage rates, three days after the Reserve Bank of Australia raised the cash rate by half a percentage point to a seven-year high of 2.35 per cent, marking the fifth straight monthly increase.

While banks routinely raise their rates after an official increase, the timing was curious, with big corporations and governments often using a major news day to announce unpopular news hoping it will be drowned out.

The latest increases mean a borrower with a typical $600,000 will see their monthly repayments rise by $173, starting from Friday next week. 

ANZ released a statement at 4.12pm, Sydney time, featuring Maile Carnegie, its group executive for retail, saying the bank cared about struggling borrowers, with rates surging at the fastest pace in almost three decades.

‘We understand the cost of living and changing rate environment is impacting customers in different ways and our experienced teams are here to help our customers understand what these changes mean for them,’ she said.

‘While many of our customers remain in a strong position, we encourage any customer who may be facing difficulties to reach out to our experienced teams as soon as they can to discuss additional personalised support.’

The latest 50 basis point increase means ANZ’s lowest variable rate will rise to 4.19 per cent from 3.69 per cent, effective September 16.

NAB’s lowest variable rate is rising by 0.5 percentage points to 4.24 per cent from 3.74 per cent, effective September 16.

The Commonwealth Bank, Australia’s biggest home lender, was the third bank to announcement an increase, releasing a statement shortly before 6pm, Sydney time.

CBA is also raising its variable rates by 0.5 percentage points, also effective on September 16. 

This will see its lowest variable rate climb to 4.19 per cent from 3.69 per cent.

Angus Sullivan, CBA’s group executive of retail banking, said he cared about borrowers struggling with household budgets.

‘We know that there is a lot of change happening for our customers right now, and supporting them through this time is a priority for us,’ he said.

ANZ released a statement at 4.12pm, Sydney time, announcing a 0.5 percentage point rise in variable mortgage rates (pictured is a Sydney bank branch)

The Reserve Bank of Australia on Tuesday raised the cash rate by 0.5 percentage points to a seven-year high of 2.35 per cent, up from an existing six-year high of 1.85 per cent. 

Governor Philip Lowe on Thursday gave a speech, which economists interpreted to mean the RBA would raise rates two more times during this tightening cycle. 

‘We are conscious that there are lags in the operation of monetary policy and that interest rates have increased very quickly,’ he told the Anika Foundation.

‘And we recognise that, all else equal, the case for a slower pace of increase in interest rates becomes stronger as the level of the cash rate rises.’

Following that speech the Commonwealth Bank, Australia’s biggest home lender, updated its forecasts to have the RBA raising rates by 0.25 percentage points in October followed by another quarter of a percentage point in November.

This would take the cash rate to 2.85 per cent, up from an earlier forecast of 2.6 per cent by November.

But Gareth Aird, the Commonwealth Bank’s head of Australian economics, said the RBA could cut rates in the second half of 2023, with CBA predicting 0.5 percentage points worth of relief for borrowers. 

ANZ has also updated its forecasts, having the cash rate peaking at a 10-year high of 3.35 per cent in December, instead of November as previously forecast.

Westpac is still expecting a 3.35 per cent cash rate by February 2023 while NAB is still forecasting a 2.85 per cent cash rate by November – with CBA now copying that prediction. 

ANZ released a statement at 4.12pm, Sydney time, featuring Maile Carnegie (pictured), its group executive for retail, saying the bank cared about struggling borrowers, with rates surging at the fastest pace in almost three decades

Three of the Big Four banks – Commonwealth, Westpac and NAB – are expecting a 0.25 percentage point rate rise in November, that would take the cash rate to a nine-year high of 2.6 per cent. 

ANZ is expecting a bigger 0.5 percentage point rise next month, that would take the cash rate rate to 2.85 per cent, which would be the highest level since May 2013.

Borrowers in May, June, July, August and now September have copped 2.25 percentage points worth of rate increases, the steepest since 1994.

Inflation in the year to June surged by 6.1 per cent, the fastest pace since 1990 without the one-off effect of the GST being introduced in 2000. 

The RBA is expecting the consumer price index to hit a 32-year high of 7.75 per cent in 2022, a level well above its 2 to 3 per cent target. 

The latest 0.5 percentage point rate rise means a Commonwealth Bank borrower with an average $600,000 mortgage will see their monthly mortgage repayments jump by $173.

Average home loan servicing costs are set to climb to $2,966 from $2,793 in coming weeks – as a popular variable mortgage rate soared to 4.29 per cent from 3.79 per cent.

The latest increase means this borrower would have seen their monthly mortgage repayments surge by $660 since early May.

Just four months ago, repayments stood at $2,306 back when the cash rate was still at a record-low of 0.1 per cent and the Commonwealth Bank was still offering 2.29 per cent variable mortgage rates.