Out of Cycle Interest Rate Changes

By Matthew Kenworthy | News

The Big Four banks have advised they will be increasing their variable rate home loans. These changes apply to both new & existing customers (with a few exceptions). Many of the non-major lenders are now starting to follow suit.

While the Reserve Bank may have left interest rates on hold for the past 7 months. This has not stopped the big banks from increasing their rates independently to the cash rate.

The changes apply to both Owner Occupiers and Investors. However, investment loans are generally having larger rate increases applied.

Who Has Increased Their Interest Rates


Westpac was the first bank to increase rates in this cycle.

Owner Occupied rates increased by 0.03% for Principal & Interest repayments. The increase is 0.08% for Interest Only repayments.

For Investment Loans the increase is 0.23% for Principal & Interest repayments. For those making Interest Only repayments on Investment Loans the increase is 0.28%.

These changes took effect 24 March 2017.


NAB have increased rates for Owner Occupiers by 0.07%. For investors the increase is 0.25%.

These changes took effect 24 March 2017.

Commonwealth Bank

For customers making Principal & Interest repayments, CBA have announced they are increasing their rates by 0.03% on Owner Occupied Home Loans. For investors they are increasing interest rates by 0.24%

For those making Interest Only repayments the changes are even larger. For owner-occupiers the increase is 0.25% and 0.26% for Investors.

These changes take effect from 8 May 2017. If you are currently paying Interest Only you might wish to switch to Principal & Interest before 8 May. This would allow you to take advantage of a lower interest rate.


ANZ have made no change to Owner Occupied loans making Principal & Interest repayments. For new lending making Interest Only repayments rates on an Owner-Occupied loan rates will increase by 0.20% from 22 April 2017.

Standard Variable Investment Loans are increasing by 0.25%. New lending with Interest Only repayments will increase by an extra 0.11% from 22 April 2017.

Other Lenders

Out of cycle changes to interest rates are not just limited to the big banks. Smaller lenders such as Macquarie, Citibank and Adelaide Bank have all announced similar changes.

We would expect other lenders to follow suit sooner rather than later.

Why Are They Doing It

Lenders have given many reasons as to why they are increasing interest rates. These include:

  • Rising costs of funding loans
  • Managing portfolio risk
  • Increased costs of compliance and regulation
  • Meeting regulatory guidelines

Many borrowers may see these ‘reasons’ as excuses to profit gouge. Whilst you can’t argue with the banks on their reasons, you can look to get a larger discount on your interest rate. This can be done by refinancing or negotiating with your existing lender.


Just because your lender has increased their interest rates recently, it does not necessarily mean that refinancing is worthwhile. You may switch your home loan for a lower rate, only to have your new lender increase it even higher than before.

While it is not necessarily a reason to switch, it is a good mental trigger to review your home loan. If you are interested in having a ‘home loan health check’ we would be happy to run the numbers for you. We can show you the savings on offer from other lenders, and advise if they have recently increased their rates.

To take advantage, please get in contact about our obligation free mortgage broker service.

About the Author

Matthew Kenworthy is a specialist in all aspects of Residential & Commercial Finance. He can assist all borrowers from First Home Buyers to Property Investors with Large Portfolios.