For decades, the housing market in Australia – which has not seen a recession in 27 years – appeared immune to any external or internal shocks, as prices kept rising gingerly year after year. That all changed in the past year, when according to Core Logic, home prices across Australia’s 5 top cities peaked in October of 2017 and have since declined by 3.5% on average.

That decline is now set to accelerate because overnight, two of Australia’s biggest banks, Commonwealth Bank of Australia and Australia and New Zealand Banking Group, announced within minutes of each other that they are raising mortgage rates citing higher funding costs, cutting chances of an official rate hike and risking a political backlash.

The rate increases followed one week after Australia’s second largest bank, Westpac, became the first of the so-called “Big Four” to raise rates. That prompted fierce criticism from Prime Minister Scott Morrison. The former Treasurer demanded the bank explain itself and suggested unhappy borrowers should shop around.

“They have to justify, in this environment when people are really feeling it, why they believe they need to clip that ticket a little harder when people in Australia and their customers I think are doing it tough,” he told reporters.

Fourth-ranked National Australia Bank Ltd is the only one of the majors not to deliver an out-of-cycle rate rise.

CommBank will increase all variable home loan rates by 15 basis points from October 4, while ANZ will hit all borrowers with a 16 basis point increase from September 27. The change means a customer with a $400,000 loan from CommBank will pay an extra $37 a month, or $447 a year. An ANZ customer with the same loan will pay an extra $40 a month, or $476 a year.

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