Like rubbing salt into an already tender wound, the Commonwealth Bank (CBA) announced today that it has lifted the interest rate on its variable home loans by 0.3 percentage points.
This move is even higher than the Reserve Bank's (RBA) 0.25 percentage point lift in interest rates yesterday and follows a 0.1 percentage point lift in rates last month despite no action by the central bank
The RBA's rate hike on Tuesday had been widely anticipated by the market and prompted other major banks to announce the reviewing of their own rates.
The rate increases on the CBA's variable rate home loans will take effect on February 8.
The annual interest rate on CBA's Complete Home Loan Variable Rate will increase by 30 basis points to 8.97% and the annual interest rate on CBA's Economiser (base variable rate) will increase by 30 basis points to 8.46%.
CBA said variable rates on business loans also would increase by 30 basis points.
The deposit rate on the NetBank Saver and Business Online Saver accounts will increase by 25 basis points, effective February 8.
"As a result of increased funding costs experienced by all Australian banks since August 2007, we increased our standard variable rate by 0.10 per cent per annum on January 9," sais CBA head of retail banking Ross McEwan.
"At the time we indicated that we should continue to absorb much of the increased cost in the belief that wholesale funding rates would moderate. Regrettably this has not happened."
Mr McEwan said that the CBA believed that rates in wholesale funding markets would remain high for a prolonged period, given the current volatility in global markets.
"While this now takes the increases, outside of the official cash rate, to 0.15 per cent, we are continuing to absorb a significant portion of the additional cost being incurred," Mr McEwan said.
CBA fell by $1.27 or 2.5% today to close down at $48.55.
