Australia’s big four banks are reviewing their standard variable mortgage interest rates after the Reserve Bank of Australia unexpectedly increased the overnight cash rate by 25 basis points to 3.25 per cent.

“We’re reviewing our rates,” Commonwealth Bank of Australia Ltd spokesman Steve Batten said.

Spokespersons from ANZ Banking Group Ltd, National Australia Bank Ltd and Westpac Banking Corporation also said interest rates were under review.

The big four banks together hold about 85 per cent of Australia’s home loan market, according to Australian Prudential Regulatory Authority figures.

CBA, the country’s biggest home loan lender, and NAB both have a standard variable rate at 5.74 per cent - the lowest among the big four banks.

ANZ and Westpac’s rates are at 5.81 per cent.

Westpac is the second biggest home loan lender.

Last week, CBA chief executive Sir Ralph Norris said he would be surprised if the banks raised home loan interest rates faster than the RBA.

“If you look at interest rates, the governor of the Reserve Bank has made it very clear that the emergency setting of three per cent for the official cash rate is unlikely to stay and there will be an upward move in rates over time,” Sir Ralph told journalists on September 30.

“I would be surprised if that were the case” he said at the time, when asked whether mortgage rates would rise faster than the cash rate.

AAP