These two banks are passing on larger rate hikes than the RBA

Two Australian lenders are hitting borrowers with interest rate hikes larger than the Reserve Bank’s February increase, but there is a silver lining.

The recently-merged Unity Bank and G&C Mutual have announced they’re hiking variable home loan rates by as much as 36 basis points for existing borrowers in the wake of the Reserve Bank of Australia’s February decision.

That sees the banks adding up to 11 basis points on top of the 25 basis point increased passed down by the central bank.

While no home loan lender has yet sat out the hike, with all that have responded so far having passed it onto variable rate borrowers, the pair are so far alone in hiking more than expected.

“Whilst changes to the RBA cash rate is one of the factors that informs our pricing decisions, there are other factors that we consider such as economic and market conditions, cost to lend, and the competitor landscape,” Unity Bank and G&C Mutual told customers.

“This helps us to assess and to continue to offer competitive rates to our members.”

G&C Mutual and Unity Bank were contacted for comment but did not respond. 

While banks and lenders can choose not to pass on the RBA’s cash rate hike, doing so would eat into their own margins, as a higher cash rate means a higher cost of doing business in the wholesale money market – a key tool for most banks.

A 36 basis point hike applied to the banks’ previously-advertised variable rate of 4.99% p.a. – as was attached to its First Home Buyer and Essential Worker products – would see repayments on a $500,000 mortgage lift by around $110 a month.

That’s around $35 more each month than the same borrower would pay if the rate was lifted by 25 basis points to 5.24% p.a.

See how a rate hike could impact your repayments: Mortgage Repayment Calculator 

However, there is a silver lining for homeowners with mortgages through Unity Bank or G&C Mutual: The hike won’t go into effect until 18 March 2026.

That places the pair as the most patient (so far), by far.

Excluding Unity Bank and G&C Mutual, Geelong Bank is waiting the longest to implement the hike, holding fire until 27 February. 

For new customers, rates on G&C Mutual and Unity Bank products were increased by as much as 50 basis points on 6 February, with the largest of the changes impacting fixed rates.

When it came to variable rates, the banks’ First Home Buyer Loan – open to those using the 5% Deposit Scheme – saw its rate lifted by 36 basis points to 5.35% p.a. (5.40% p.a. comparison rate*).

The banks also plan to lift some savings rates by up to 1.75% p.a. on 1 March, though they haven’t disclosed which accounts the changes will apply to.

While no other lenders have so far hiked rates for existing borrowers by more than 25 basis points, many are yet to respond at all. 

That means there’s still potential another bank or two might follow in the footsteps of Unity Bank and G&C Mutual in hiking more than 25 basis points.

The last time a lender made waves in the wake of an RBA rate change was in February 2025, when Virgin Money – a part of the Bank of Queensland stable – refused to pass on the RBA’s 25 basis point cut to variable rate home loan holders.

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_{Image by Irham Setyaki on Unsplash}