IMB Bank has followed the decision of the Reserve Bank earlier in the week to raise interest rates.
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Variable interest rates on home and business loans will increase by 0.50 percentage points.
Term deposit rates will also increase, with the interest rate on 12-month term deposits increasing to 2.25 per cent per annum.
IMB Bank CEO Robert Ryan said that the decision to increase rates was based on the Reserve Bank's move as well as the broader economic outlook.
"Our decision to lift variable rates reflects careful consideration of a range of factors and how to best balance the needs of all of our members, including those with loans and those who are saving with us," Mr Ryan said.
"Although many of our borrowers are ahead of their loan repayment schedule, we understand that the rising rate market may create difficulties for some of our home loan customers, especially as cost-of-living pressures increase. I encourage those members to speak with our team of specialists about the options available to them to provide repayment certainty."
The big four banks - ANZ, Commbank, NAB and Westpac - all also passed on the rate rise in full.
Mr Ryan said that in light of the change in rates the bank was reviewing the rates it offered other savers.
"The falling rate market has benefitted borrowers in recent years, but been challenging for savers, who have experienced reduced earnings on savings accounts. We are pleased to offer the special term deposit rate to support our depositor members, and are reviewing our deposit products more broadly," he said.
The changes to variable home loans and 12-month term deposits are effective from June 17
Borrowers will be notified of their new repayment amount in their July statement, with the new amount taking effect from September.
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