Australia’s Major Bank Stuns with Triple Rate Hike Before RBA Decision
Homebuyers in Australia are now facing significant challenges as major banks initiate sharp increases in fixed mortgage rates. The Commonwealth Bank of Australia (CBA), the country’s largest financial institution, has implemented substantial hikes that resemble a triple rate increase. This adjustment has added hundreds of dollars to the typical home mortgage repayment.
Details of the Rate Hikes
Starting today, CBA has increased its fixed mortgage rates by up to 0.70 percentage points. Specifically, the three-year fixed rate surged from 5.34% to 6.04%. This sudden change places borrowers who opted for fixed rates earlier in a favorable position.
Breakdown of Fixed Rates
- Three-year fixed rate: Increased by 0.70 points to 6.04%
- One-year fixed rate: Increased by 0.45 points to 5.94%
- Two-year fixed rate: Lowest now at 5.79%
- Four-year fixed rate: Increased by 0.30 points to 6.09%
- Five-year fixed rate: Increased by 0.30 points to 6.24%
Macquarie Bank has also raised fixed rates, marking its second increase in six weeks with an additional 0.25 percentage points across all fixed terms. In the past month, a remarkable 34 lenders have raised their fixed rates, indicating an industry-wide trend.
Implications for Borrowers
Sally Tindall, director of data insights at Canstar, highlighted that borrowers who delayed fixing their loans are now feeling the repercussions. According to her, CBA’s current lowest fixed rates surpass those of other major banks across all terms.
Comparatively, last year, CBA offered a competitive two-year fixed rate of 4.99%. The current lowest fixed rate of 5.79% reflects a significant shift in the lending landscape.
Alternatives in the Market
Although the majority of borrowers are on variable rates, those considering fixed loans may feel they have missed their opportunity. Despite rising rates, some smaller lenders still provide competitive rates below 5%.
- Pacific Mortgage Group: One-year fixed rates starting at 4.99%
- Geelong Bank: One-year fixed rates starting at 4.99%
- Various credit unions: Two-year terms starting from 4.94%
Tindall also noted that the availability of lenders offering fixed rates below 5% could diminish significantly before the next Reserve Bank of Australia (RBA) meeting.
Currently, NAB offers the lowest fixed rates among the big four banks, with rates at 5.39% for both one-year and two-year terms. This rate is 0.55 percentage points cheaper than CBA’s one-year offering.
Looking Ahead
The RBA is scheduled to announce its interest rate decision on February 3. As banks prepare for potential cash rate hikes, borrowers should remain vigilant about future loan terms.
