Bendigo and Adelaide Bank has lifted its home loan interest rates by 15 basis points because it says higher funding costs have made its margins unsustainable.
The bank will increase its standard variable home loan rate from 7.30 per cent to 7.45 per cent, effective from February 21.
Customers with an average mortgage of $250,000 will have a $24 per month increase in repayments as a result, Bendigo says.
The move follows standard variable rate increases from ANZ and Westpac on Friday, by 0.06 and 0.1 percentage points respectively, and a decision by the Reserve Bank of Australia one week ago to leave the cash rate on hold.
'This is not a popular move, we know that, but it is the right thing to do to restore a proper balance between depositors, borrowers, the bank's shareholders and our community partners,' managing director Mike Hirst said in a statement on Monday.
'At current funding cost levels, that balance is out.'
Funding costs have increased in the last six months, and the bank's internal modelling suggests it is not making money on new mortgages being written, he said.
'Banks are currently subsidising mortgages and if you look at the traditional role of a bank, this makes no sense and is unsustainable,' Mr Hirst said.
He also said many staff at Bendigo had taken unpaid leave to help reduce costs, while no new back office staff were being hired.
