Commonwealth Bank the second of the big four to raise interest rates

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The Commonwealth Bank has become the second major bank to raise home loan interest rates, announcing yesterday that investors and owner occupiers will be paying more from mid-November.

Effective from 20 November, CBA’s variable home loan rates will rise by 0.15%, which is below the increase of 0.2% announced by Westpac last week.

The increase means that for owner occupiers, the standard variable home loan rate will increase to 5.60% per annum, while for investors the standard variable interest rate will rise to 5.87% per annum.

Like Westpac, CBA said the rate rise was a result of needing to recoup some of the costs associated with new regulations that require banks to hold increased amounts of capital against their mortgage books.  

“We recently raised $5.1 billion to strengthen our capital position in line with new regulatory requirements implemented in response to the Financial System Inquiry. We have now reviewed our home loan pricing in light of these changes,” Matt Comyn, CBA's group executive for retail banking services said.

“Any decision to change interest rates is carefully considered. The cost of the new capital required to make the Australian banking system more secure needs to balance the interests of our customers, as well as the nearly 800,000 households who are direct shareholders and the millions more who are invested through their superannuation funds,” he said.

Fixed-rate loans and business loans will not be subject to the change.

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