After two days of silence, Commonwealth Bank has finally confirmed it will lift interest rates on its variable mortgages by 0.5 percentage points.
This makes CBA the first of the “big four” banks to pass on the Reserve Bank’s latest rate hike.
The RBA lifted its cash rate target by 0.5 percentage points on Tuesday, taking the new rate to a six-year high of 1.85 per cent.
It was no surprise that the commercial banks would pass on the RBA’s rate increase to their borrowers.
However, the surprising aspect is how uncharacteristically slow the banks have been in making such announcements in the past couple of days.
CBA’s main rivals — Westpac, NAB and ANZ — still haven’t provided any update on their new borrowing rates.
Australia’s fifth-largest lender, Macquarie Bank, was the first bank to lift its rates — within hours of the RBA’s decision on Tuesday.
This was followed on Wednesday by ubank — an NAB subsidiary — announcing it would lift its savings rates by 0.5 percentage points in September.
Delay in being the first mover
“This kind of waiting game is unusual, but not unprecedented,” said Sally Tindall, the research director of RateCity.
“Back in 2010, three of the big four banks took between eight and 10 days to make announcements following the 0.25 percentage point RBA hike on 2 November.”
“The delay could be a worrying sign for savers. It’s possible the banks are still mulling over whether they will pass on the full hike to all their savings customers.”
“However, the big four banks could just be playing a game of chicken to see which one of them moves first.”
CBA increased its the standard variable rates for its borrowers by 0.5 percentage points.
The bank also said it would increase the rate on “select savings products”, meaning it has not passed on the RBA’s full rate hike to all savers.
The Federal Treasurer Jim Chalmers has been pressing banks to pass on the RBA’s interest rate rises, in full, to savers who have had record low returns over recent years.
Shortly before the RBA’s decision on Tuesday, Dr Chalmers said the big banks should do the fair thing and apply higher interest rates to customers with savings accounts.
“There needs to be some positives out of this,” he said.
“For savers they need and deserve higher interest rates on their savings. So I will have the opportunity to convey to the banks directly my expectation that these interest rate rises get passed on to savers.”