Lenders wait for a further lead from Westpac

No other lenders of which this newsletter is aware sought any publicity for decisions on home loan interest rates yesterday, in the wake of the 25 basis point rise in the cash rate steered through by the RBA on Tuesday and Westpac's price leadership in lifting variable rates by 45 bps on its standard variable rate.

Mortgage brokers and retail banking product monitors are yet to learn of any rate decisions of note.

Only one home loan interest rate advertisement appeared in national newspapers this morning. Laiki Bank (Australia) increased its variable rate loan by 25 bps, in line with the RBA, to 6.73 per cent (with Laiki already a pretty expensive lender, though it also offers a steep discount on the first year).

Commonwealth Bank was the only other interest rate advertiser, lifting the rate on margin loans and geared investment loans by 25 bps.

The decision making for other major banks may be proving delicate or they may be choosing to allow Westpac to wear the media and political backlash before following on with home loan rate rises of more than 25 bps themselves.

Interestingly Westpac also remained silent yesterday on the pricing plans for its other brands including St George, Bank of South Australia and Rams.

Rams continues to advertise home loans at a rate of 5.09 per cent for the first two years, 167 basis points below the new variable rate for Westpac.

Rate rises for Rams and St George must be in the works but some exaggerated pricing differentials look likely to exist across the Westpac portfolio of retail banking brands (and to an extent dulling the bank's argument that the rising cost of funds justifies the extent of the 45 bps extra on its headline home loan rate).