Westpac has broken ranks and will increase its variable home loan rates despite the official cash rate remaining on hold.
At its board meeting earlier this month, the Reserve Bank left the official rate at a record low 1.5 per cent, racking up two years since there was any change.
The RBA said it expected rates to stay on hold well into next year while some economists were predicting rates wouldn’t change until 2020.
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But Westpac says it’s been forced to increase its own rates because of the higher cost of wholesale funding.
The banks variable home loan rates will increase by 0.14 per cent from September 19.
Westpac’s rate for owner-occupiers properties will increase to 5.38 per cent, while the rate for residential investment properties will increase to 5.93 per cent.
The other banks, including the Westpac-owned St George Bank are expected to follow the lead and increase their rates as well.
The move is the first out-of-cycle increase in many years with the bank likely to face calls from the Government to justify the increase.