Commonwealth Bank first big four banks to raise variable mortgage rates to match RBA’s August rise

The Commonwealth Bank has become the first of Australia’s big four banks to raise variable mortgage rates to match the latest Reserve Bank increase.

Variable mortgage rates with Australia’s biggest home lender are increasing by 0.5 percentage points after the RBA on Tuesday raised the cash rate by 50 basis points to a six-year high of 1.85 per cent. 

That means a popular variable rate will rise to 3.89 per cent, up half a percentage point from 3.39 per cent, from August 12. 

CBA’s group executive of retail banking Angus Sullivan acknowledged the latest increase would make life harder for borrowers.

‘We have been helping customers understand the changing rate environment and consider what it means for them, and we will continue to be there for them,’ he said.

The latest increase will see a Commonwealth Bank borrower with an average $600,000 mortgage owe an extra $169 a month in mortgage repayments, as they rose to $2,827 from $2,658. 

While CBA was the first of the big four banks to raise its variable mortgage rates to reflect the latest Reserve Bank increase, Macquarie Bank on Tuesday was the first major lender to react to the official cash rate change. 

The Reserve Bank’s May, June, July and August rate rises, adding up to 1.75 percentage points, have marked the steepest increase in the cash rate since 1994.

The cash rate has now increased by 0.5 percentage points for three straight months for the first time since the RBA began publishing a target cash rate in 1990.