Ratecity.com.au said Westpac on Thursday increased its variable rate on its basic mortgage product by 0.1 per cent for new customers. Existing customers were unaffected.

CBA moved again today by increasing the rates on its package variable home loan, which includes an offset account, by up to 0.12 percentage points but only for new customers, Rate City said.

“This is the second time Australia’s biggest bank has increased the new customer rates on this loan in the last two weeks. In total, since 31 March, the bank has increased these rates by up to 0.22 percentage points,” it said.

Westpac hiked select new customer variable rates yesterday, while NAB and ANZ increased select new customer variable rates last month.

The banks are not restricted to following RBA and in the past, they have increased rates above the RBA cash rate when the cost of funding new loans had increased.

The increases in mortgage rates was likely to have a big impact on the thousands of homeowners who come off fixed-rate mortgages and have to negotiate new terms with the peak of that expected to occur this month.

The RBA recently announced that 15 per cent of people with mortgages would have negative spare cash flow in a year’s time.

“That means when you add up their loan repayments with spending requirements that is going to exceed their cash flow,” QIC chief economist Matthew Peter said.

“To adjust to that they are going to have to adjust their spending or eat into their accumulated savings.

“We are going to see a large number of households, roughly around 10 per cent, really constrained in their ability to spend over the coming year. That’s going to drag down growth and cap any further rate hikes by the RBA.

“Even though inflation is falling in Australia, it’s going to be slow to fall it’s going to be accompanied by rising rents and electricity prices and that’s going to weigh of peoples’ budgets and unfortunately going to lead to quite a significant slowing in household spending.”

It follows a series of mortgage rate hikes in recent weeks. Rate City charted the increases that were on top of those following the RBA increases. The first started as far back as March 1 when the CBA increased the rate on its basic mortgage for borrowers with less than 70 per cent loan-to-value ratio.

On the same day and then again on March 10, the NAB increased its basic variable by 0.2 per cent. This affected borrowers with more than 80 per cent LVR on March 1 and with less than 80 per cent LVR on March 10.

The CBA moved again on March 25 for the majority of loan tiers by up to 0.21 per cent and on March 31 it lifted the rate on its wealth package loans.

On March 28, ANZ increased the rate on its basic home loan (Simplicity Plus) for the majority of loan tiers by 0.2 per cent.

Rate City’s Sally Tindall said that the big four banks (NAB, CBA, Westpac and ANZ) said the banks had previously been waging a competitive campaign to attract new customers but this was now on the wane.

“All big four banks have now walked back some of their new customer discounts as they feel the heat from the rising cost of funding,” Tindall said.

“That said, these relatively minor rate increases aren’t going to put the big four out of the refinancing game entirely.

“With almost $20 billion worth of refinanced loans up for grabs each month, Australia’s biggest banks are still aiming for a decent slice of the pie.

“Westpac’s lowest variable rate is still a competitive 5.24 per cent, which includes a 0.40 percentage point discount for the first two years. Coupled with a $3500 cashback for refinancers looking to switch, that’s still a reasonably competitive deal in the short term.

“However, anyone looking to set and forget their home loan might be better off looking for a lower rate, particularly if they’re saddled with significant amounts of debt.

“This spate of new customer rate rises doesn’t necessarily mean you’ve missed the refinancing boat, although you might want to look beyond the big four banks if you’re after an ultra-low rate.”