Westpac must justify rate rise: O'Dwyer

Assistant Treasurer Kelly O'Dwyer says it is up to Westpac to justify to customers a decision to raise its variable mortgage rate.

The big four bank on Wednesday announced it would raise the rate by 0.20 percentage points to help cover the cost of new capital requirements.

Ms O'Dwyer told reporters in Canberra the government would have more to say on capital adequacy when its response to the financial system inquiry, chaired by former banker David Murray, is made public.