Westpac has followed ANZ in raising its rates in light of the RBA decision to hold steady.
The bank announced on Friday it would lift its standard variable rate 10bps to 7.46%. Westpac Group executive of retail and business banking Jason Yetton said the move reflected the bank's increased funding costs, and defended the rate rises as ensuring a strong banking system.
"Australia benefits from a strong banking system that supports the Australian economy. We need our banks to be strong to protect the interests of all Australians, whether they be depositors, home buyers, retirees, business borrowers, employees or shareholders. Over the past four months intense competition for term deposits has increased their cost to us by around 0.30%, while wholesale funding costs have also risen significantly," Yetton said.
Westpac also argued that the majority of its home loan customers would not pay the full 7.46%. The bank said more than 90% of its home loan customers had discounted rates.
Westpac's rate rise follows the move made by ANZ to lift its standard variable rate by 0.06% to 7.36%. But while taking with one hand, the bank gave with the other, cutting its three-year fixed rate by 15bps to 5.99%.