The boss of Westpac is blaming increased funding costs for his decision to hit borrowers with higher home loan rates.

The bank says interest rates on its standard variable mortgage will rise 0.14 of a per cent.

On a $500,000 loan, it will add just under $50 a month or just under $600 a year.

Westpac’s CEO Brian Hartzer tells Ross Greenwood the bank has been absorbing the additional costs until it was no longer possible.

“A decision to increase interest rates is always difficult and it’s never something that we relish.

“In this case, we’ve been watching the wholesale funding costs for six months.

“When we come to a conclusion, after six months, that these rates are going to sustain at these levels, in the end I have to run the company for the long term and that means occasionally making difficult decisions.”

He says Westpac’s decision to raise rates hasn’t been influenced by the banking royal commission.

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