The country's second biggest bank, Westpac, is raising home loan interest rates, in a move that has sparked predictions the other big banks will also jack up borrowing costs.

As the banking industry faces fierce political pressure after damning revelations at the royal commission, Westpac on Wednesday made the first lift in variable mortgage rates by a big four bank this year, blaming an increase in its wholesale funding costs.

Westpac is the first of the big four banks to raise its home loan rates. Credit:James Alcock

The 0.14 percentage point increase is about half the size of a standard move in official rates set by the Reserve Bank, which has not moved rates in two years.

Chief executive Brian Hartzer said the hike was needed to reflect higher wholesale funding costs, which shot up early this year and have remained elevated since then.