CEO Michelle Bagnall said the cost of securing funds to lend to its members and increased regulatory costs had driven the decision to move at this time.
“Our last interest rate increase was two years ago and the reason we’ve held for as long as possible is because our focus is on helping our members, not returning profits for shareholders,” Ms Bagnall said.
“We know these decisions are felt directly at the hip pocket of our banking members, so they’re not taken lightly.
Ms Bagnall said RACQ would keep its funded Mortgage Saver loans at 3.69 percent to help new home buyers who took advantage of this special rate in January this year.
“The first years of a new mortgage can be tough, so we don’t want to put added pressure on our members who are new to the housing market,” she said.
“Our Townsville members who have received hardship assistance from RACQ Bank as a result of impacts of the recent floods, will also be exempt from this increase.”
Ms Bagnall pointed out that for almost two years RACQ had maintained one of the lowest home lending rates and even with this increase, remained one of the most competitive rates available today.
“RACQ continues to buck the downward market trend on home lending, with more and more members using their club bank” she said.
Ms Bagnall said RACQ continued to invest in digital technology for the bank, with members now able to access Apple Pay, Samsung Pay, Google Pay and fast payments via the New Payments Platform.
“In recent months we’ve also delivered a new online banking platform and mobile banking app and continue to work on improving these platforms for members.”
The 16 basis points increase will be effective from Thursday 9 May 2019.