Mortgage market competitive dynamics are changing in the face of rising rates, with some small, non-bank lenders forced to increase their home loan rates by more than 50 basis point increase in the cash rate last month, while some bigger lenders are keeping rates lower for target segments.

Comparison site Mozo reported in its latest Banking Roundup that lender Athena Home Loans increased variable rates by 65 basis points for most of its borrowers and Freedom Lend increased rates by between 60 and 70 bps, depending on the borrower and loan type.

Homestar also increased variable rates by between 60 and 70 bps and lender Yard increased variable rates by up to 104 bps.

At the same time, bigger lenders are segmenting their marketing, with cheap deals for preferred customers.

Commonwealth Bank has been increasing its standard variable home loan rate in line with cash rate changes since May, with its package rate now 5.1 per cent. But it is offering a basic product at 3.29 per cent for borrowers with low loan-to-valuation ratios.

And in May it launched a digital home loan, Unloan, which is currently available to borrowers refinancing and has a variable rate of 3.14 per cent.

Macquarie increased its Basic and Offset rates by between 35 and 45 bps. Bank of Queensland increased its Economy variable loan rate by 40 bps. Bankwest increased its Premium Select variable rate by 31 bps for borrowers with low LVRs.

ANZ increased variable rates by 50 bps but towards the end of month wound back some of the increase on its Simplicity Plus loan, which now starts at 3.19 per cent.

Canstar reported that there is much more pricing for risk now, with lenders offering rates that are 20 bps lower on average for borrowers with big deposits (40 per cent or more) or refinancers with at least 40 per cent equity.

The average variable interest for owner occupiers paying principal and interest in the Canstar database s 4.06 per cent and the lowest rate of 2.69 per cent.