THE Australian Government has got it wrong.

Firstly, the first home buyers grant was supposed to be worth something. Giving away as much as $32,000 for a first home buyer appears an attractive offer.

But that was until this week when the interest rate hike continued.

ANZ, Commonwealth Bank and St George have increased interest rates across mortgages in excess of this week’s official interest rate hike, but have stopped short of Westpac’s super-sized increase.

The hike came as Commonwealth Bank warned pressure would remain on all banks to push through further interest rate rises above the Reserve Bank as funding costs soar.

Commonwealth Bank yesterday said it would increase interest rates on its range of standard variable mortgages by 37 basis points, while ANZ took a slightly softer approach, raising mortgage rates by 35 basis points.

Westpac sparked a furore this week when it raised interest rates across its variable mortgages by 45 basis points, nearly twice the level of the Reserve Bank’s 25 basis point rate hike.

It has now given the first home buyers grant little value particularly with greater rate hikes expected over the next year.

Maybe it was needed to boost the economy; but at the same time the government has suckered first home buyers into a mighty punch; bigger and even more hurtful than Danny Green’s.

The first home buyers grant is simply a taste tester; an option to tempt you into the market. But once you’re there, look out.