Treasurer Wayne Swan says customers who are unhappy with their banks should consider changing to another financial institution.
ANZ and Westpac banks both lifted their variable lending rates despite the Reserve Bank of Australia leaving the official interest rate unchanged.
ANZ raised its rate by 0.06 percentage points to 7.36 per cent and Westpac upped its rate by 0.1 percentage points to 7.46 per cent.
The RBA left the official cash rate at 4.25 per cent.
"I think the customers of ANZ and Westpac will be very unhappy with their banks," Mr Swan told reporters in Brisbane.
"And the fact is that the government has put in place reforms in competition policy that do make it easier for people to have far greater choice when it comes to a financial provider.
Mr Swan said there were better deals around.
"If customers are unhappy with their financial institution I urge them to take the time and think about changing," he said.
Opposition Treasury spokesman Joe Hockey said Mr Swan was sending out mixed messages.
"Wayne Swan needs to get across the funding challenges of the banks. He is the man responsible for overseeing the economy," Mr Hockey told reporters in Sydney.
"It is a massive punch to consumer confidence to have speculation about interest rate cuts and a week later end up with interest rate rises.
"The more Wayne Swan talks about it the more it sends confused signals to Australian businesses and Australian consumers."
AAP ms/c
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