Westpac announced that from June 21, home loan variable interest rates would increase by 0.5 percent, in line with the RBA's increase.
Similarly, Macquarie Bank announced on Wednesday that it would pass the full 0.5 percent onto customers from June 17.
Westpac Consumer and Business Banking Chief Executive Chris de Bruin acknowledged that the hikes would impact customers' budgets but noted that the majority of customers had an adequate buffer to deal with the rise.
"The majority of our customers are ahead on mortgage repayments and have a buffer available to help them manage an interest rate increase," said de Bruin.
The cash rate now stands at 0.85 percent, up from the bottom level of 0.10 percent which was maintained during the pandemic until the beginning of May, when the rate was lifted by 0.25 percent.
As of May, Australia's median house price sits at just over 750,000 Australian dollars (about 540,000 U.S. dollars), according to property analyst firm, CoreLogic. This means middle homeowners would be paying approximately 200 Australian dollars (about 144 U.S. dollars) more per month for each half a percent of an interest rate rise.
Consumer finance expert at the University of Sydney Dr. Andrew Grant told Xinhua on Wednesday the pressure on homeowners would mount with each successive hike.
"The increase will throw off all the other expenses that you have to budget for, especially with wages not going up at the same pace...it's just going to put a lot of pressure on the bottom line for most households," said Grant.
He said the sharp increase was likely an indicator that the RBA was becoming increasingly concerned about Australia's inflation rate of 5.1 percent, but several supply-side challenges remain.
Latest comments