ANZ Banking Group Ltd has matched the central bank, increasing its standard variable mortgage interest rate by 25 basis points.

The bank’s standard variable home loan rate will rise to 6.31 per cent as of Monday November 9, from 6.06 per cent, Melbourne-based ANZ said in a statement on Tuesday.

The Reserve Bank of Australia (RBA) increased the overnight cash rate by 25 basis points to 3.50 per cent on Tuesday - the second increase in the space of a month.

ANZ also said it was raising interest rates on a range of deposit products by 35 basis points.

Spokespersons from the other three major banks, National Australia Bank Ltd, Commonwealth Bank of Australia Ltd and Westpac Banking Corporation said their interest rates were under review.

ANZ said the interest rates for credit cards and business lending would also rise by 0.25 per cent, as would other variable rate mortgage products.

“Funding costs remain high and despite improvements in credit markets the average cost of wholesale funding is increasing which is continuing to place considerable pressure on mortgage margins,” ANZ chief executive for Australia Graham Hedges said in the statement.

“If sustained over time, there will be commercial pressure to pass the additional costs on.

“Right now, it’s in everyone’s interest that the recovery consolidates and the right thing to do at this point in the economic cycle is for us to absorb the additional funding costs.”

The interest paid on ANZ’s progress saver account will increase by 35 basis points to three per cent.

ANZ was the first of the major banks to announce the change to its mortgage rate in October as well, after the RBA raised the overnight cash rate.

At this stage, Commonwealth Bank and NAB’s standard variable home loan rate is 5.99 per cent and Westpac’s is 6.06 per cent.

Together, the big four control about 85 per cent of Australia’s mortgage market.

Regional lender Bendigo and Adelaide Bank Ltd said its interest rates were also under review.

AAP