All four major banks will pass on the Reserve Bank's (RBA) 0.25 percentage point cash rate increase in full. Variable home loan rates will rise from 9 October, and the last big bank rate starting with a 5 will leave the market.
Commonwealth Bank (CBA) moved first on 30 September, confirming its home loan variable rate increase following the RBA decision. Westpac, NAB, and ANZ followed.
CBA's move also extends beyond home loans. In its changes to interest rates on business products, CBA said eligible variable-rate business loans will rise by 0.25 percentage points from the same date. The increase applies to reference rates including its Residential Equity Rate and flows through to products such as BetterBusiness Loans and Business Overdrafts.
"As inflationary pressures persist, many Australian businesses continue to face higher operating costs and tighter margins," said Mike Vacy-Lyle, CBA group executive business banking.
If the RBA hikes again in November, Canstar estimates a borrower who held a $600,000 loan at the start of this year's hikes would pay $92 more a month, taking the cumulative increase across five hikes to $456. For $1 million in debt, the cumulative rise would be $759.
"This is going to be brutal for some borrowers who are lugging around super-sized debts attached to rates that could soon easily start with a 7," said Sally Tindall, data insights director at Canstar.
Tindall said banks must give borrowers at least 20 days' written notice before higher repayments are debited. She added that most banks allow two to three months.
Angus Sullivan, CBA group executive retail banking, said each customer's priorities would differ.
"For some customers, the immediate priority might be understanding how their repayments and budget may change and where adjustments can be made," Sullivan said.
CBA also pointed to fixed and split loans for borrowers seeking repayment certainty.
Australian Bureau of Statistics data showed headline inflation rose to 4% in the year to August, up from 3.5% in July. The trimmed mean, the RBA's preferred core measure, held at 3.6% for a third straight month.
The RBA will see September CPI and labour force figures before it meets on 2–3 November, and brokers will be watching both releases closely.
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