The Commonwealth Bank of Australia Ltd has raised its variable home loan interest rates by 0.14 per cent because of the continued rising cost of funds.
"This means that the bank's standard variable rate home loan will increase from 9.44pct p. a (per cent per annum) to 9.58pct p. a and its basic variable home loan from 8.93pct pa to 9.07pct p. a," CBA said in a statement.
The new rates will be effective from July 14 for new and existing customers.
Ross McEwan, group executive retail banking services, said the bank's own cost of funding was more than 100 basis points - excluding any increases by the Reserve Bank Of Australia - above the levels that were being experienced before August 2007.
"The bank continues to balance the needs of its shareholders and customers by not passing on the full impact of the increased funding costs to borrowers and as a result has seen the margins on its home loan business decline significantly in the last year," he said in a statement.
The CBA's move comes exactly one week after Australia's fifth largest bank, St George, lifted its standard variable interest rate by 20 basis points to 9.67 per cent, as tries to offset higher funding cost.
Last week, the Reserve Bank of Australia (RBA) left official interest rates unchanged at a 12-year high of 7.25 per cent.
The latest rate rises from CBA and St George also follow gloomy reports on the state of the mortgage market.
Housing finance figures this week showed home loan approvals have dropped 25 per cent over the past four months.
