Australia's Big Four banks pass central bank rate hike to home-loan customers

AUSTRALIA’S Big Four banks said on Tuesday (Dec 6) that they will raise their home loan rates by a quarter-point, passing on in full the central bank’s eighth rate hike in as many months to their customers.

Earlier on Tuesday, the Reserve Bank of Australia lifted its cash rate by 25 basis points, to a 10-year high of 3.1 per cent. The central bank reiterated that further policy tightening would be needed to contain inflation.

The Commonwealth Bank, National Australia Bank, as well as Australia and New Zealand Banking Group will hike their rates from the end of next week. Westpac’s hike will be effective Dec 20.

Australian lenders have been in lockstep with the central bank in raising rates, as banks are looking to prop up their margins and profits in a cooling housing market. The current tightening cycle is one of the most aggressive in decades.

However, lenders could face challenges from the impact of heightened borrowing costs on credit demand, employment, economic growth, and the housing market. REUTERS