Westpac Raises Rates on Fixed-Rate Home Loans, Marking the End of Ultra-Cheap Financing
The bank announced today that it will increase its fixed rates to two, three, four and five years by 0.10% for new owner-occupied loans that pay off principal and interest.
This follows in the footsteps of the ABC, which hiked its two-, three- and four-year fixed rates by the same amount last Friday.
RateCity.com.au research director Sally Tindall said big banks expect loans to become more expensive, despite the lack of early indicators from the Reserve Bank of Australia (RBA).
“As RBA insists next cash rate hike will not happen until at least 2024, banks predict rising cost of funding once borders reopen and economy will rebound, ”Ms. Tindall said.
“While Westpac’s fixed rate hikes today are relatively small, people waiting for a home loan who haven’t locked in their rate will understandably be annoyed.”
Ms Tindall said better deals always exist in the market, but borrowers will need to shop around.
“Westpac has kept its fixed one- and two-year rates below 2% for homeowners paying principal and interest to remain competitive in a market where refinancing is at record levels,” said Ms. Tindall.
“While the writing may be on the wall for fixed rates, the party is not over yet – there are still 154 fixed rates below 2%.”
Canstar financial expert Steve Mickenbecker said it was only a matter of time before the whole market moved to higher rates.
“Lenders are scrambling to raise fixed rates before they start to feel the squeeze in margins,” Mickenbecker said.
“The recent upward trend in fixed rates reinforces the fact that markets anticipate interest rate hikes for some time in 2023. The emergence of global inflation for the first time in years is a clear signal a shorter horizon towards higher rates at all levels. “
He thinks the biggest danger for borrowers is resting on their laurels and not looking for the best deal.
“Borrowers should not be as complacent as they should expect increases in two years, and the closer they get to that point, the less attractive the fixed-rate alternative will be,” Mickenbecker said. .
“They might want to consider fixing their interest rate for three years or more, as long as things are going well.”
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