CBA joins ANZ to raise interest rates on variable mortgage loans

The Commonwealth Bank has announced an 0.15 percentage point increase to its standard variable rate.

Commonwealth Bank and ANZ have become the last major banks to raise their interest rates for mortgage loans, and both institutions blame rising international borrowing costs.

ANZ announced on Thursday that it will increase its standard variable rate by 0.16 percentage points, citing higher financing costs, but saying that the increase will not apply to regional clients affected by the drought.

CBA followed soon after with an increase of 0.15 percentage points to its standard variable rate.

ANZ announced its rise of 0.16 percentage points on Thursday. (AAP)


The banks measure follows Westpac announcing an increase in its mortgage loan rate on August 29.

The highest ANZ rates will go into effect as of September 27, the bank said, and will raise its interest rate and residential interest to 5.36 percent.

The Commonwealth Bank increase will go into effect on October 4 and the standard rate for homeowner borrowers will increase to 5.37 percent per year.

CBA group executive Angus Sullivan said the decision, which was released in minutes from ANZ, came "after careful consideration."

"We are very aware of the impact that rising interest rates will have on our customers, however, it is important that we put a price on our mortgage loan products in a way that reflects the underlying costs," he said.

Sullivan said that CBA had absorbed higher financing costs during the past six months.

"Unfortunately, costs have remained high and are now expected to remain high for the foreseeable future," he said in a statement.

The executive of the Australian ANZ group, Fred Ohlsson, said the increase in the rate was "a difficult decision".

"We know the impact that rising interest rates have on family budgets," he said.

"The reality is that for us it is more expensive to finance our mortgage loans in the wholesale markets and we also need to balance the needs of all those interested."

ANZ said it will not raise mortgage rates for its customers in parts of the Australia region declared dry, a measure that will protect about 70,000 borrowers from the increase.

The round of rate hikes, which has also been carried out by Suncorp, occurs despite the fact that the Reserve Bank maintained once again the cash rate at a historical minimum of 1.5 percent.