RBA hikes rates by 0.25%. This is how banks are responding

The Reserve Bank of Australia has finally decided to bring down the monetary hammer, announcing that it will increase official interest rates from 0.1% to 0.35%.
The decision officially marks the end of the Board’s pandemic era stimulus, which it unleashed in March 2020 to shore up a struggling economy.
“The Board judged that now was the right time to begin withdrawing some of the extraordinary monetary support that was put in place to help the Australian economy during the pandemic,” RBA governor Philip Lowe said.
“The economy has proven to be resilient and inflation has picked up more quickly, and to a higher level, than was expected.
“There is also evidence that wages growth is picking up. Given this, and the very low level of interest rates, it is appropriate to start the process of normalising monetary conditions.”
A number of economists believed the RBA would wait until the federal election had passed before delivering a 40 basis point rate hike in June. But a surprise lift in inflation proved too urgent to ignore.
“The RBA is keen to get a bit of normalisation into the system, and a small increase this week followed by another 25 basis point increase in June will be less alarming to people than a one-off 40 basis point hike,” said Mozo’s banking expert Peter Marshall.
Data from the Australian Bureau of Statistics last week showed headline inflation rose by 2.1% over the March quarter — the steepest increase in more than 20 years.
This brought the annual rate of inflation from 3.5% to 5.1%. The RBA’s preferred measure of inflation, trimmed mean inflation, also came in at 3.7% — well above the Board’s long-held target of 2-3%.
“This rise in inflation largely reflects global factors. But domestic capacity constraints are increasingly playing a role and inflation pressures have broadened, with firms more prepared to pass through cost increases to consumer prices,” Lowe said.
Further rate hikes are expected as the Board looks to tame rising prices. A recent report by Westpac, which assumed a 0.15% increase today, forecasts a 0.25% increase in July and August, followed by further 0.25% increases in October and November.
How will mortgage rates be affected?
Variable rates tend to move in line with the cash rate, so today’s decision will likely be felt in full by anyone who hasn’t fixed their loan.
“Lenders’ margins have had pressure on them for a couple of years now, so we can expect them to jump on any opportunity they can to rebuild those margins,” said Marshall.
“There are also signs of pressure on deposit rates. There’s a bit more competition appearing in that space so banks will be keen to get as much money from a rate rise as they can.”
Higher rates will create pain points for many borrowers, particularly those who bought at the top of the property cycle or bid above the market rate for their home.
Research by Mozo found that 8% of borrowers believe a rate hike of any size would put them under serious financial stress. Meanwhile, more than half (55%) of borrowers have not tested their ability to make repayments at a higher rate.
RELATED: Which banks have raised home loan rates?
Higher cash rate expectations have already been priced into fixed rates, so any further increases are expected to be smaller and less frequent. Nonetheless, Marshall warns that fixed rates might no longer provide the refuge they did in previous months.
“While high inflation is a key feature of the global economy at the moment, it will probably drop off over the next 12 months and there’s a chance we’ll enter a more recessionary environment,” he said.
“If that happens, currently rising global interest rates will go into reverse. So anyone locking into a five-year fixed term for their home loan now might find that well before those five years are up, they’re paying quite a bit over the market rate.”
We’ll be keeping track of which banks have increased variable rates as word comes in. If you feel that refinancing is in order, be sure to visit our home loan comparison page, where you’ll be able to filter your search by rate and type.
Which banks have increased rates?
Home Loan | Old rate | New rate | Effective date | Rate change | Naughty or Nice |
---|---|---|---|---|---|
2.89 | 3.04 | 13 May 2022 | 0.25 |
|
|
4.39 | 4.64 | 13 May 2022 | 0.25 |
|
|
1.99 | 2.24 | 5 May 2022 | 0.25 |
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|
2.99 | TBA | ||||
3.0 | 3.25 | 25 May 2022 | 0.25 |
|
|
3.99 | 4.24 | 13 May 2022 | 0.25 |
|
|
4.75 | 5.0 | 18 May 2022 | 0.25 |
|
|
4.78 | 5.03 | 16 May 2022 | 0.25 |
|
|
4.45 | TBA | ||||
5.1 | 5.35 | 13 May 2022 | 0.25 |
|
|
4.55 | 4.8 | 20 May 2022 | 0.25 |
|
|
4.44 | 4.69 | 12 May 2022 | 0.25 |
|
|
3.66 | 3.91 | 10 May 2022 | 0.25 |
|
|
3.26 | 3.51 | 23 May 2022 | 0.25 |
|
|
4.49 | TBA | ||||
4.71 | 4.96 | 20 May 2022 | 0.25 |
|
|
2.29 | 2.54 | 10 May 2022 | 0.25 |
|
|
2.79 | TBA | ||||
2.69 | 2.94 | 13 May 2022 | 0.25 |
|
|
4.61 | 4.86 | 13 May 2022 | 0.25 |
|
|
4.52 | 4.77 | 13 May 2022 | 0.25 |
|
|
4.25 | 4.5 | 18 May 2022 | 0.25 |
|
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4.61 | 4.86 | 17 May 2022 | 0.25 |
|
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4.56 | 4.81 | 17 May 2022 | 0.25 |
|
|
4.98 | 5.23 | 18 May 2022 | 0.25 |
|
|
2.24 | TBA | ||||
4.58 | 4.83 | 17 May 2022 | 0.25 |
|
Read last month's Reserve Bank interest rates update.
Home loan comparisons on Mozo - last updated 21 May 2022
-
Smart Booster Home Loan
2 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR
interest rate
comparison rate
Initial monthly repayment2.10% p.a.variable for 24 months and then 2.50% p.a. variable2.46% p.a.New super low introductory rate home loan for two years. Min 20% deposit. No monthly or ongoing fees. Fast settlement times. Mozo award-winning online lender. Friendly, local Australian based team.
CompareCompareSmart Booster Home Loan
New super low introductory rate home loan for two years. Min 20% deposit. No monthly or ongoing fees. Fast settlement times. Mozo award-winning online lender. Friendly, local Australian based team.
- interest rate
- 2.10% p.a.variable for 24 months and then 2.50% p.a. variable
- comparison rate
- 2.46% p.a.
- interest rate
- 2.10% p.a.variable for 24 months and then 2.50% p.a. variable
- comparison rate
- 2.46% p.a.
- Upfront fees
- $520
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- Optional - with 0.10% additional interest
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $50,000
- maximum borrowing amount
- $1,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
Read our Mozo Review to learn more about the Smart Booster Home Loan
-
Neat Home Loan
Owner Occupier, Principal & Interest, LVR <60%
interest rate
comparison rate
Initial monthly repayment1.89% p.a. variable1.90% p.a.Competitive variable rate. Borrowers choose their repayment schedule (weekly, fortnightly or monthly) Make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.
CompareCompareNeat Home Loan
Competitive variable rate. Borrowers choose their repayment schedule (weekly, fortnightly or monthly) Make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.
- interest rate
- 1.89% p.a. variable
- comparison rate
- 1.90% p.a.
- interest rate
- 1.89% p.a. variable
- comparison rate
- 1.90% p.a.
- Upfront fees
- $250
- Ongoing fees
- $0.00
- Discharge Fee
- $300.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 60.00%
- minimum borrowing amount
- $80,000
- maximum borrowing amount
- $5,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
Read our Mozo Review to learn more about the Neat Home Loan
-
Celebrate Variable Home Loan
<60% LVR, Owner Occupier, Principal & Interest
interest rate
comparison rate
Initial monthly repayment2.14% p.a. variable2.14% p.a.Rates have moved in line with RBA. Fast and efficient online application. Automatic discounts as loan is paid down. Free extra repayments and redraw facility. Zero fees. Min 40% deposit required.
CompareCompareCelebrate Variable Home Loan
Rates have moved in line with RBA. Fast and efficient online application. Automatic discounts as loan is paid down. Free extra repayments and redraw facility. Zero fees. Min 40% deposit required.
- interest rate
- 2.14% p.a. variable
- comparison rate
- 2.14% p.a.
- interest rate
- 2.14% p.a. variable
- comparison rate
- 2.14% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 60.00%
- minimum borrowing amount
- $100,000
- maximum borrowing amount
- $2,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
Read our Mozo Review to learn more about the Celebrate Variable Home Loan
-
Basic Home Loan
Owner Occupier, LVR<60%, Principal & Interest
interest rate
comparison rate
Initial monthly repayment2.39% p.a. variable2.39% p.a.Competitive low variable rate. No application or account management fees. Flexibility to split your loan and set different repayment types. Fee free withdrawals of your savings.
CompareCompareBasic Home Loan
Competitive low variable rate. No application or account management fees. Flexibility to split your loan and set different repayment types. Fee free withdrawals of your savings.
- interest rate
- 2.39% p.a. variable
- comparison rate
- 2.39% p.a.
- interest rate
- 2.39% p.a. variable
- comparison rate
- 2.39% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $400.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 60.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- $5,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
Read our Mozo Review to learn more about the Basic Home Loan
-
Mozo experts choice awards won:
- Best New Home Loan - 2022
- Low Cost Home Loan - 2022
Variable Home Loan
Owner Occupier, Principal & Interest
interest rate
comparison rate
Initial monthly repayment2.24% p.a. variable2.24% p.a.Purchase and Refinance. No upfront or ongoing fees. Fast digital application. 100% offset sub account with no account or redraw fees. Comes with a Visa debit card, mobile App, and digital wallet. 20% deposit or equity required. Mozo Experts Choice winner for Best New Home Loan and Low Cost Home Loan 2022. 18 years and over.
CompareCompareVariable Home Loan
Purchase and Refinance. No upfront or ongoing fees. Fast digital application. 100% offset sub account with no account or redraw fees. Comes with a Visa debit card, mobile App, and digital wallet. 20% deposit or equity required. Mozo Experts Choice winner for Best New Home Loan and Low Cost Home Loan 2022. 18 years and over.
- interest rate
- 2.24% p.a. variable
- comparison rate
- 2.24% p.a.
- interest rate
- 2.24% p.a. variable
- comparison rate
- 2.24% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes - offset sub account
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $100,000
- maximum borrowing amount
- $2,500,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
Read our Mozo Review to learn more about the Variable Home Loan
-
Mozo experts choice awards won:
- Low Cost Home Loan - 2022
Variable Rate Home Loan
Owner Occupier, Principal & Interest, LVR <80%
interest rate
comparison rate
Initial monthly repayment2.09% p.a. variable1.99% p.a.$5000 refinance cashback. Owner-occupier refinancers only living in NSW/VIC/SA metro and inner regional areas. Receive up to an additional 0.15% off your rate as you pay off the loan. Receive bonus payments up to $2,500. T&Cs apply.
CompareCompareVariable Rate Home Loan
$5000 refinance cashback. Owner-occupier refinancers only living in NSW/VIC/SA metro and inner regional areas. Receive up to an additional 0.15% off your rate as you pay off the loan. Receive bonus payments up to $2,500. T&Cs apply.
- interest rate
- 2.09% p.a. variable
- comparison rate
- 1.99% p.a.
- interest rate
- 2.09% p.a. variable
- comparison rate
- 1.99% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- no
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $20,000
- maximum borrowing amount
- $2,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Fortnightly, Monthly
- Special Offers
- Receive $5000 cashback for Owner Occupier Refinancers only in eligible areas only.
Read our Mozo Review to learn more about the Variable Rate Home Loan
* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
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