A major Australian bank has alerted its clients to an immediate rate hike following the RBA’s massive cash rate announcement.
ING has announced that it will increase all variable rates on new and existing home loans for homeowners and investors by 0.25% per annum.
The new rates are effective May 10, 2022. Existing Home Loan customers will receive a letter in the mail confirming the updates by June 1, 2022.
The decision came after the RBA announced it would raise Australia’s official record cash rate by 25 basis points to 0.35% from 0.1% on Tuesday.
“Any customer who may be concerned about their ability to repay their home loan is encouraged to contact ING as soon as possible so that the bank can work with them to find a solution,” the bank said in a press release on Wednesday.
It’s the first rate hike in 11 years – since November 2010 – and is a desperate attempt to quell soaring inflation, which has hit an annual rate of 5.1% and pushed up prices at the fastest rate in two decades.
Prime Minister Scott Morrison argues that many of the cost of living pressures affecting Australians are caused by international factors beyond the government’s control.
Shadow Treasurer Jim Chalmers spent Tuesday criticizing the Morrison government, saying an Albanian government would be better able to manage Australia’s fragile economy.
Appearing on ABC’s 7.30am show on Tuesday night, Mr Chalmers said one positive aspect of the change was that those living off their savings would be better off.
“The general rule of thumb is that for every $20,000 you’ve saved for an interest rate hike of this magnitude, that’s $50 a year,” he said.
“It’s not a lot of money, but it’s better than nothing.”
While acknowledging that the RBA’s decision was predictable, Mr Chalmers said the government had a responsibility to address some of the surrounding factors.
“We are not judging Scott Morrison for not taking responsibility for all of this. We are judging him for not taking any responsibility in any of this,” he said.
“We have a real cost of living crisis in this country. We have soaring inflation, falling real wages and now rising interest rates are part of the pain under Scott Morrison’s watch.
Treasurer Josh Frydenberg also appeared on the program, describing the rate hike as a “normalization” of monetary policy following the pandemic.
He noted that other countries had seen similar or even greater increases in their official interest rates in recent months, including the United States, the United Kingdom, Canada and New Zealand.