Westpac joins the ‘in crowd’ with mortgage rate rise.

It may only represent $4.69 a month to a borrower with a 25-year mortgage of $125,000, but Westpac (plus their Bank of Melbourne and Challenge subsidiaries)have increased their variable owner occupied housing rate by 0.06% to 6.55%.

Of course it prompts all the usual questions regarding the other banks following suit, but the reality is that Westpac is just moving into line with the other “big three” banks at 6.55%, following National Australia Bank’s increase earlier this month from 6.45%.

The move is insufficient to prompt existing Westpac customers to re-finance their loans, and with the big four all at the same level, is unlikely to dramatically affect their market share. It will however improve Westpac's margin, under pressure in recent months from rising bill and bond rates, and of course their bottom line.

The move is unlikely to result in an overall rise in market rates, so consumers should not panic. However, it is unlikely that variable rates will FALL from this point, and those wishing to fix their loans should consider all their options in spite of the fact that they have missed the bottom of the market when five year rates were below 7%.