Westpac has joined the other three major banks in raising mortgage rates more than the Reserve Bank with a 35-basis-point increase.

The move came just over an hour after National Australia Bank raised its standard variable mortgage rate by 43 basis points.

While Westpac's increase is the smallest of the big four, it still has the highest standard variable mortgage rate.

The standard variable mortgage rates for the big four banks are:

NAB - 7.67 per cent

ANZ - 7.80 per cent

Commonwealth - 7.81 per cent

Westpac - 7.86 per cent

All the rate rises are above the Reserve Bank's 25-basis-point official hike last week, but Westpac's latest move is below ANZ's 39-basis-point increase and CBA's 45-basis-point rise.

Westpac-owned St George Bank announced a 37-basis-point rate increase to 7.80 per cent per annum, effective from Tuesday.

Unlike ANZ and NAB, Westpac has made no mention of removing its mortgage exit fees, although it is offering a 40-basis-point discount on its three-year fixed loans, as is ANZ.

Westpac's rate hike takes effect from Tuesday, while the National's rate rise will take effect on Monday - but NAB's removal of early exit fees will not take place until December 6.

National Australia Bank's head of personal banking, Lisa Gray, says it is still offering the lowest rates among the big four.

"For 17 months NAB has delivered its customers the lowest standard variable home loan interest rate of the major banks, and today's announcement means we will continue to offer a highly competitive rate," she said in a statement.

National Australia Bank says its variable business lending rates will also rise 43 basis points, while deposit interest rates will increase between 25 and 100 basis points depending on the type of account.

Westpac says its deposit rates will increase at least 25 basis points, but it did not mention what change it would make to variable business lending rates.

As with the other major banks that have exceeded the RBA's official increase, NAB says it has been absorbing additional funding costs but that it is "not sustainable" for the bank to keep doing that forever.

Westpac quantified the costs in an effort to justify its decision to exceed the official rate hike.

"As we disclosed at our recent earnings result, higher funding costs have resulted in the interest margin in the Westpac Retail and Business Banking division declining 0.19 per cent compared to the previous 12 months, and 0.13 per cent in the six months to September 2010," said Rob Coombe, its group executive for retail and business banking, in a statement.

The senior strategist at TD Securities Annette Beacher says homeowners paying off mortgages are likely to get a reprieve from the big four banks for a while, unless the European debt crisis ignites further fears on financial markets.

"This could be the last time we see this, or if we have another disruption in financial markets then we may see another adjustment," she said.

She says the oversized rate rises by the retail banks may also mean a longer reprieve from official interest rate rises.

"With getting more bang for its buck, the RBA can sit tight for a couple of months knowing all-but "two" rate hikes have been achieved for the price of one," she added.

"The OIS [overnight indexed swap] market agrees, with a thin 8 per cent chance of [interest rate] tightening priced for December 2010. However, not pricing a 25 basis point hike until July 2011 is somewhat unrealistic given clear upside inflationary pressures facing the economy."