Westpac has followed rival National Australia Bank by raising its variable mortgage rates for owner-occupiers and investors.
The changes announced Friday include Westpac's owner-occupier rate rising by 0.03 percentage points to 5.32 per cent from March 24, and by 0.08 percentage points to 5.49 per cent for interest-only loans.
Westpac also lifted its small business variable rates by 0.08 percentage points from April 3.
NAB has already lifted its rates after the US Federal Reserve this week hiked its cash rate by 0.25 percentage points in a move likely to increase overseas funding costs for Australia's big four banks.
"Today's changes are in response to increasing funding costs," Westpac consumer bank chief executive George Frazis said in a statement.
"Despite home loan interest rates being at historically low levels, both deposits and wholesale funding of mortgages have increased over the last nine months."
With the major lenders under pressure to rein in investor lending, Westpac lifted its variable investor rate by 0.23 percentage points to 5.79 per cent, and its interest-only investor rate by 0.28 percentage points to 5.96 per cent.
"We try to balance the needs of both owner occupiers and investors in making these decisions," Mr Frazis said.
"We are offering lower interest rates to customers who make principal payments to encourage customers to pay down their home loan."
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