Australian Big Bank Stuns with Triple Rate Hike Before RBA Decision
Homebuyers in Australia faced significant challenges today as the Commonwealth Bank (CBA), the nation’s largest bank, announced steep increases in fixed mortgage rates. This change equates to a triple rate hike, dramatically impacting the cost of home loan repayments.
Commonwealth Bank Rate Increases
Starting today, CBA raised its three-year fixed rate from 5.34% to 6.04%, a substantial increase of 0.70 percentage points. The one-year fixed rate experienced a hike of 0.45 percentage points, now sitting at 5.94%. Additionally, the lowest fixed rate available for a two-year term is now 5.79%.
- Three-Year Fixed Rate: Increased to 6.04%
- One-Year Fixed Rate: Increased to 5.94%
- Two-Year Fixed Rate: Lowest is now 5.79%
- Four-Year Fixed Rate: Increased to 6.09%
- Five-Year Fixed Rate: Increased to 6.24%
Macquarie Bank Also Raises Rates
Macquarie Bank joined the trend, implementing its second rate increase in just six weeks. It added 0.25 percentage points across all its fixed terms. This shift aligns with trends observed across the banking sector, where 34 lenders have adjusted at least one fixed rate recently.
Future Rate Predictions
The upcoming Reserve Bank of Australia (RBA) meeting on February 3 may lead to additional cash rate hikes, prompting many lenders to reassess their fixed rate offerings. According to Sally Tindall, data insights director at Canstar, borrowers who delayed fixing their loans are now facing increased costs.
Tindall noted, “CBA’s lowest fixed rates are now higher than those of its major competitors across all terms.” This stark change places CBA far from its previous two-year fixed rate of 4.99% offered last year.
Current Market Landscape
While most borrowers are on variable rates, options under 5% are still available through smaller lenders. For instance:
- Pacific Mortgage Group: One-year fixed rates starting at 4.99%
- Geelong Bank: Similar offerings at competitive rates
- Some credit unions: Two-year terms available from 4.94%
However, Tindall expressed concerns that the availability of fixed rates starting with a ‘4’ may dwindle rapidly as the next RBA meeting approaches. Interestingly, NAB currently offers the most competitive fixed rates among the big four banks. Their one-year and two-year terms are available at 5.39%, significantly cheaper than CBA’s rates.
As the financial landscape evolves, borrowers are advised to reassess their options promptly to avoid potential losses from rising mortgage rates.
