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Westpac Bumps Mortgage Rates Out Of The Blue

Westpac has announced an increase to its variable home loan mortgage rates in a response to what it said were “rising  funding costs that are threatening our profit margins”.

In a move which usually only conincides with Reserve Bank interest rate announcements, Westpac’s variable mortgage rates will rise by 14 basis points (0.14 percentage points) from September 19.

It now remains to be seen if Westpac’s major competitors – the Commonwealth Bank, ANZ or the National Bank – will follow suit.

The increase applies to both new and existing customers, and owner-occupiers and investors.

The move follows an announcement from the bank on Friday last week that its borrowing/lending interest rate margins had slumped over the past few months, which not only sent its share price sliding but also may have put some pressure on the bank to raise its rates.

Westpac’s net interest margin (NIM) fell from 2.17 per cent in the first half of its financial year (October 1 to March 31) to 2.06 per cent in the June 30 quarter.

The market reacted favourably to the announcemt, with shares in all four big banks surging in Wednesday afternoon trade.

Westpac itself closed up 2.35pc,  ANZ rose 2.05pc, CBA rose 1.46pc and NAB 1.72pc.