“Tide turning on interest rates”: Lenders hike fixed rates

Australia’s biggest banks have hiked their fixed rate for owner-occupiers in a further sign that “the tide is turning on interest rates”. 

CBA has increased both its three- and four-year fixed rates for owner-occupiers paying principal and interest by 0.05%, as well as some interest-only loans by 0.10%. So is Westpac and NAB in recent months.

In March, ANZ senior economist Felicity Emmett said fixed-mortgage rates had already reached their lowest point, or close to it, as lenders began lifting their four-year fixed rate products.

Furthermore, Canstar research shows 38% of lenders have increased at least one fixed rate over the past two months.

Why are fixed rates moving upwards if the RBA hasn’t lifted the cash rate?

The Reserve Bank of Australia (RBA) has repeatedly said the official cash rate isn’t likely to be increased until 2024 at the earliest.

But given that’s now within three years, the banks are beginning to adjust their three- to four-year fixed rates to head off those potential RBA rate hikes.

“The money market is already factoring in [RBA rate] rises,” explains AMP Capital chief economist Shane Oliver.

“That’s not having much of an impact on two-year rates yet. But as we go through the course of the year, the possibility of rate hikes will start to impact shorter rates as well.”

So what’s next?

Well, when the Majors make their move, it’s not uncommon for  other lenders to follow suit.

Lender always offer applicants to cap the interest rate prior to settlement with fees applied.

If you wish to tap on the competitive fixed rate which some of other lenders still offering, it is good to start exploring your loan options.

Get in touch

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.