Westpac Banking Corp is the last of the major banks to lift its variable home loan rates independently of the central bank.
Westpac, the third largest bank in Australia, will raise its standard variable rate by 14 basis points to 9.61 per cent, from Thursday.
The rise follows hikes by National Australia Bank, Suncorp, AMP Bank, ANZ, Commonwealth Bank, BankWest and St George this month.
NAB raised its rate on Monday to 9.61 per cent and last Friday Commonwealth Bank bumped up its rate by 14 basis points to 9.58 per cent and ANZ lifted 15 basis points to 9.62 per cent.
AMP Bank and Suncorp increased their rates on Monday while BankWest did so last week.
Westpac's takeover target, St George, kicked off the latest hike cycle on July 4, with a 20 basis point rise to 9.67 per cent.
Westpac group executive of consumer financial services Peter Clare said the rate rise reflected higher funding costs in financial markets, following a global credit crunch.
"While passing on some of the additional costs to customers, we are continuing to absorb a significant portion of the additional longer-term funding costs that we have experienced since the market volatility began almost 12 months ago," Mr Clare said.
"We continue to be very thoughtful in our approach of balancing the needs of our customers with the needs of our shareholders.
The Reserve Bank of Australia (RBA) left official interest rates unchanged this month, when its board voted to leave the cash rate at a 12-year high of 7.25 per cent on July 1.
In its minutes released on Tuesday, the RBA board cited a tightening in financial conditions as one of the reasons it left rates steady, saying this should help slow demand and lower inflation over time.
It said the current stance of policy, in conjunction with a tightening in financial conditions since the middle of last year and rising fuel costs "were working to restrain demand."
Australian Bankers' Association acting chief executive Ian Gilbert said the commercial bank had adopted a conservative approach in passing on higher wholesale funding costs to their mortgage customers since the start of this year.
"The simple fact is that banks, like any other businesses, have to adjust their prices when their cost base significantly increases," Mr Gilbert said.