Major Australian Bank Stuns with Triple Rate Hike Ahead of RBA Decision
In a surprising move, Commonwealth Bank of Australia (CBA), the nation’s largest bank, has enacted a significant increase in fixed loan rates. This change, described as akin to a triple rate hike, is expected to significantly impact borrowers seeking home loans.
Details of the Rate Changes
Effective immediately, CBA has raised its fixed rates by as much as 0.70 percentage points. This adjustment mirrors the effect of three consecutive increases from the Reserve Bank of Australia (RBA).
- Three-year fixed rate: Increased from 5.34% to 6.04%
- One-year fixed rate: Increased by 0.45 points to 5.94%
- Lowest two-year fixed rate: Now at 5.79%
- Four-year fixed rate: Increased to 6.09%
- Five-year fixed rate: Increased to 6.24%
Macquarie Bank has also intensified the situation by implementing its second rate increase in a short span of six weeks, raising rates by 0.25 percentage points across all fixed terms.
Impact on Borrowers
With fixed rates soaring, many homeowners who hesitated to secure fixed loans might face higher repayments. Currently, CBA’s revised lowest fixed rates now surpass those of its competitors in the big banking sector.
Sally Tindall, from Canstar, points out that last year CBA offered more attractive rates, with a two-year special at 4.99%. Now, potential borrowers are confronted with much less appealing rates.
“Most borrowers are still on variable rates, but those considering a fixed option might feel they’ve missed out,” Tindall stated.
Current Market Landscape
Despite the spike, a few smaller lenders continue to offer competitive rates below 5%. For example:
- Pacific Mortgage Group: One-year fixed rate from 4.99%
- Geelong Bank: One-year fixed rate from 4.99%
- Some credit unions: Two-year terms starting from 4.94%
The market situation is fluid, with the number of lenders offering rates beginning with ‘4’ potentially dwindling as the upcoming RBA meeting draws near.
Future Considerations
National Australia Bank (NAB) currently offers the most competitive fixed rates among major banks, with both one-year and two-year fixed terms at 5.39%. This rate is significantly 0.55 points lower than CBA’s one-year offering.
The RBA is set to announce its next interest rate decision on February 3. Many industry experts are watching closely to see how this will further affect lending rates across Australia.
