Australia's giant bank Westpac has strongly defended its high 45 basis points rise in variable mortgage rates, saying that the increased interest margin in the bank's most recent yearly result would have been adversely affected and taken away had it continued to ignore the commercial realities of the steadily stabilizing and growing economy.

After the RBA's announcement of a 25 basis points increase in the rate of interest, banks all over Australia have put their own rates under review. But Westpac has gone beyond the RBA's margin and raised its rates by a shocking value, leading Treasurer Wayne Swan warning it to brace itself for a possible "customer backlash".

Analysts have, after RBA and Westpac's decisions, estimated that other major banks of the country would "move as high as Westpac's 6.76 per cent rate on competition grounds".

Peter Hanlon, Westpac's Group Executive Retail and Business Banking, has shared that while there is a good change that customers could be very confused "about the need for the dramatic variable-rate increase", especially since the bank had initially reported a 30 points increase into its current year's interest margin to 2.32%, they need to understand that it was a necessary move.

The RBA is now scheduled to meet to discuss, and possibly revise, the policies and rates in February, and given the latest Westpac development, economists are pegging that there is a good chance that the February rate rise could be around 52%, terming it as a "line-ball call".