Fixed rate hike flurry turns into a frenzy

[ad_1]

Australia’s biggest banks have added to their recent flurry of fixed rate hikes, with Commonwealth Bank and Westpac lifting rates on fixed term loans for the second time in a fortnight.

Australia’s biggest banks have added to their recent flurry of fixed rate hikes, with Commonwealth Bank and Westpac lifting rates on fixed term loans for the second time in a fortnight. 

CommBank is no longer offering any fixed rates under 2 per cent after the changes, raising its one, two, three, four and five year fixed interest rates by up to 0.5 per cent.

The biggest rise was for four year fixed rates for owner occupiers paying principal and interest, while five year terms were only hiked by 0.1 per cent.

CommBank’s other increases ranged from 0.25 per cent to 0.4 per cent, for one, two and three-year fixed terms.

The increases follow Westpac and St George lifting rates on their two, three, four and five-year fixed rate loans earlier this week.

Research by RateCity.com.au showed 33 lenders have now lifted at least one fixed rate in the last month.

RateCity.com.au research director Sally Tindall said the moves were likely in anticipation of an increase in the costs of funding for the banks, and forecast other banks to join the majors in lifting fixed rates in coming weeks.

“For anyone thinking about fixing their rate, it’s not too late to get a good deal,” Ms Tindall said.

“However, in this environment where banks are falling over each other to announce their fixed-rate hikes, people might want to consider paying a rate lock fee.”

Ms Tindall said rate lock fees were generally considered to be a waste of money by many borrowers, but with the banks raising rates so often it was worth considering, in the context that a home loan can take about six weeks to settle. 

Canstar finance expert Steve Mickenbecker said it had not taken long for the banks to react to the Reserve Bank of Australia dumping its 0.1 per cent yield target for May 2024 government bonds earlier this week.

“The Reserve Bank announcement didn’t tell the banks anything they didn’t know, but it lines up another duck in the case for an earlier return to increasing short term rates.” Mr Mickenbecker said. 

“The banks have been increasing home loan fixed rates for some months, starting at the five year rate, then successively four, three and two. Commonwealth’s move piques interest as the first major bank since 2018 to lift its one year rate, signalling how quickly the interest rate cycle is moving up.  

“With no risk of being locked-in to substandard margins, banks and their funders like variable rates when the outlook is up, but for borrowers the days of super low variable rates look numbered.  

“The horizon has come back from 2024 to 2023, and is moving closer. 

“Fixed rates are becoming less attractive to borrowers and they face the tough call of fixing at a longer term for certainty but at a higher rate, or taking the low variable rates and one year rates still on offer.”



[ad_2]

Source link

Call Now ButtonCall Us Now