February interest rate update

In this article we outline how the Australian banks have reacted to the latest interest rate rise and give you a rundown of all the latest rates.

Interest Rates

Last week marked the 11th consecutive increase in the official cash rate by the RBA when they elected to increase interest rates by 0.25 basis points to 7.0 per cent on Monday. Despite Federal Treasure Wayne Swan issuing a "please explain" note to the Commonwealth for increasing their standard variable rate by 0.05 basis points more than the official RBA increase, the CBA's rate still remains equal with Westpac's as the most competitive variable rate of the major banks. Now that the dust has had time to settle, we have taken the time to analyse the major banks reaction to the most recent RBA rate rise.

The Commonwealth Bank of Australia (CBA)

Australia's biggest lender, the Commonwealth Bank, elected to increase their standard variable rate by 0.05 basis points above the RBA rise (0.3 basis points rise in total). The Commonwealth's rate rise sent their variable rate to 8.97 per cent. Like their counterparts, the CBA attributed the additional rate rise to increases in the cost of sourcing capital emanating from the sub-prime mortgage crisis in the U.S. Once again Federal Treasure Wayne Swan weighed into the argument stating that the "CBA had a lot of explaining to do" for increasing rates by more than the RBA official increase. Despite the CBA's rate rise, the bank still remains equal with Westpac as the most competitive of the majors.

National Australia Bank (NAB)

The National Bank also elected to increase rates by more than 0.25 basis points increasing their official rate by 0.29 per cent to 8.98. Although the rate rise was less than that of the CBA's, the NAB's official rate still remains 1 basis point higher than that of the CBA's. On a brighter note, the NAB has eased the rates on some fixed loans by up to 0.11 per cent, presumably an attempt to gain some market share by appealing to the ever increasing number of consumers seeking fixed home loans to reduce their risk.

ANZ

The ANZ were better behaved this time around, electing to follow the RBA's guidelines only increasing rates by the minimum 0.25 basis points. However, the ANZ still remain out of line with the other banks with their official rate climbing to 9.02 per cent.

Westpac Banking Corporation (WBC)

Westpac Banking Corporation's rate is again competitive with that of the CBA's as they elected to pass on the minimum rate rise of 0.25 basis points after lifting it by 0.15 per cent in January.

Other Banks

Of the other big banks, St George Bank's standard variable home loan rose to 9.02 per cent while BankWest moved its standard variable rate up by 25 basis points to a level of 8.9 per cent.

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Published on February 2-th, 2008 in Home Loans
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.
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