ANZ has become the second major bank to raise home loan interest rates, despite no move on the horizon from the Reserve Bank, with the Commonwealth Bank following just minutes later.

The moves by both banks follow Westpac's decision last week to hike mortgage rates by 14 basis points.

ANZ will increase its variable home loan interest rates by 16 basis points, across both owner-occupier and investor mortgages, while CBA's rates will rise by 15 basis points.

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NAB is the only major bank yet to raise mortgage rates, but Regal Funds Management analyst Omkar Joshi said it is only a matter of time.

"I think it's pretty certain now NAB will have to go as well — probably not have to so much as they can go now," he told ABC News.

"The three other peers have gone, there's absolutely no reason for them not to go now and it helps their margin as well."

Funding costs up

ANZ's group executive for Australia Fred Ohlsson said ANZ did not take the decision to raise rates lightly.

"This was a difficult decision given we know the impact rising interest rates have on family budgets," he said in a statement.

"The reality is it is more expensive for us to fund our home loans on wholesale markets and we also needed to balance the needs of all stakeholders."

CBA's group executive for retail banking, Angus Sullivan, said his bank gave the decision "careful consideration".

"We are very conscious of the impact that increasing interest rates will have on our customers, however it is important that we price our home loan products in a way that reflects underlying costs," he noted in a statement.

In a refrain similar to the justification Westpac's chief executive Brian Hartzer gave to the ABC's PM program last week, Mr Sullivan said there is no sign of these costs going down.

"Over the past six months, we have seen funding costs increase significantly, driven primarily by a rise in the 90-day Bank Bill Swap Rate. These changes have increased the cost of providing loans to our customers," he said.

"We have absorbed these higher funding costs over the past six months in the hope that they would ease. Unfortunately, the costs have remained high and it is now expected that they will remain elevated for the foreseeable future."

It is an argument that is backed up by Mr Joshi.

"There is a funding cost impost and it has been increasing since about February this year — that's really been the short-term funding costs rising. That's been hurting their [profit] margins," he observed.

"There's always a delicate balance between how much of the impact you wear yourself — which they have been for the last six months — and then how much you actually pass on.

"The reason they've waited six months is mainly because there's a royal commission going on and, politically, it's not really the most palatable of decisions to be making at this point in time."

ANZ rate rise 'twice the funding cost headwind'

However, UBS bank analyst Jonathan Mott said ANZ in particular looks to be profiteering off the rate rise.

"This round of repricing is significant in that it passes through more than the additional wholesale funding costs to existing customers — especially at ANZ," he wrote in a note on the moves.

"In fact, if wholesale funding costs remain at current levels we estimate it will cost ANZ approximately $150m pre-tax. "However, we estimate ANZ's mortgage repricing is almost twice that large at around $300m pre-tax.

"This additional repricing is likely to offset the revenue impacts from the large discounts currently being offered to attract new customers (who can qualify under tighter underwriting standards) and switching from interest-only to lower rate principal and interest mortgages."

Mr Mott said CBA's rate rise more closely matches its increased funding costs, but it is pulling extra profits in other ways.

"CBA also recently cut its NetBank Saver deposit rates by 30 basis points which will provide a boost to revenue above the funding cost headwind."

'Start shopping around'

ANZ said its 70,000 home loan customers in drought-declared areas of regional Australia would be excluded from the rate increase.

ANZ's rate increase will take effect from September 27, while CBA's will hit borrowers from October 4.

The Commonwealth Bank said the four week delay in applying the rate rise is intended to give customers "an opportunity to look at their options".

Interest rate comparison website RateCity's research director Sally Tindall said customers do have options available to refinance to find lower rates.

"While Australia's big banks might move like a flock of sheep it doesn't mean their customers have to," she noted in an email.

"If you live in your own home and own at least 20 per cent of it, start shopping around — you'll be surprised at what rates are on offer.

"Plenty of lenders are ready and waiting to take on your business with rates as low as 3.44 per cent."

RateCity said the extra repayments on a $400,000 home loan from the ANZ rate rise would be $40 a month, while Commonwealth customers would pay $37 a month more on the same size of mortgage.

Mr Joshi said that extra cost is unlikely to cause significant financial hardship for the vast majority of borrowers.

"I don't think we're going to see a spike in [mortgage] arrears just yet on the back of 14 or 16 basis points," he said.

"If they keep going, obviously at some point that starts to become a risk. You can't just keep raising rates and maintaining profitability with no negative impact as well."

Follow Michael Janda on Twitter @mikejanda.

ABC's The Business presenter Elysse Morgan has an exclusive television interview with ANZ's chief executive Shayne Elliott, airing tonight on ABC News Channel at 9:45pm (AEST).