Prime Minister Kevin Rudd should apologise to homeowners for the latest interest rate rise, Shadow Treasurer Joe Hockey says, blaming "reckless" government spending for the increase.
The Reserve Bank of Australia on Tuesday lifted the official cash rate by 25 basis points to 4.0 per cent - the first rise for 2010.
Hockey said government spending was responsible for the rate hike, calling on the government to wind back its crisis-era stimulus measures.
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"The Reserve Bank is increasing interest rates faster and higher than any other comparable country in the world, and they are doing that because the government is refusing to pull back from recession level spending at a time when clearly the Australian economy is near trend growth," Hockey told reporters in Sydney.
ANZ, Commonwealth first to lift rates
The Commonwealth Bank of Australia was the first big bank to raise interest rates on standard variable loans (SVR) in 2010, lifting its benchmark rate by 25 basis points to 6.86 per cent.
The bank says it will increase interest rates on a range of deposit and variable home loan accounts, reflecting recent increases in
market interest rates and wholesale funding costs.
New rates will affect new and existing customers from March 5.
The move by Australia's biggest lender comes after the Reserve Bank raised the official cash rate by 25 basis points to 4.00 per
cent today.
ANZ bank also said it would match the RBA's rate hike, raising its SVR home loan interest rate to 6.91 per cent, effective March 5.
Interest rates on selected deposit products will also rise by 25 basis points.
Housing industry warns against haste
The Housing Industry Association says the RBA should exercise caution in raising interest rates too quickly.
The HIA recognised the need to return interest rates to normal levels over the course of economic recovery, but still had considerable concerns over the state of the global economy.
The rate rise is further bad news for first home buyers, senior economist Ben Phillips said.
Phillips says the removal of the first home buyers boost and interest rate increases in the December quarter of 2009 saw a record drop in affordability.
Homeowners 'should seek apology'
Hockey said homeowners should directly blame Mr Rudd for the rate increase.
"If the government does not pull back on its massive and wasteful spending on programs like the pink batt program ... interest rates will go higher," he said.
"Kevin Rudd is responsible for this interest rate increase. Kevin Rudd is responsible for the pain families are going to have to go through.
"Kevin Rudd should apologise for his reckless and wasteful spending, which is putting upward pressure on interest rates."
