Big Four Banks hike home loan interest rates despite RBA Pause, so is now a good time to refinance?
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Despite the April RBA pause, Westpac and CBA have raised interest rates on several home loan offerings. While the increases are relatively small compared to the 0.25% and 0.50% hikes that have become the norm in the last 11 months, they still indicate the banks expect rates will stay higher, or go higher, in the next few months.
Westpac and CBA make home loan rate changes in April
Last week, Commonwealth Bank lifted the variable interest rates on a few of its Standard Variable Rate (Wealth Package) tiers, each between 10 and 12 basis points.
CBA Standard Variable Rate Home Loan (Owner-Occupied, P&I, Wealth Package) rate changes - 14 April 2023
| LVR | Change | New Rate |
| < 60% |
10 bp |
5.44% p.a. (5.82% p.a. comparison rate*) |
| < 70% | 12 bp | 5.54% p.a. (5.92% p.a. comparison rate*) |
| < 80% | 12 bp | 5.64% p.a. (6.03% p.a. comparison rate*) |
This packaged home loan is among CBA’s lowest rate offers at the moment.
Westpac made similar increases to its Flexi First Option Home Loan Special Offer, its most competitive home loan product in the Mozo home loan database. The new rates are as follows:
Westpac Flexi First Option Home Loan Special Offer (Owner-Occupied, P&I) rate changes - 13 April 2023
| LVR | Change | New Rate |
| < 70% |
10 bp | 5.64% p.a. (5.57% p.a. comparison rate*) |
| 70% - 80% | 10 bp | 5.74% p.a. (5.67% p.a. comparison rate*) |
| > 80% | 10 bp | 6.04% p.a. (5.97% p.a. comparison rate*) |
Variable rates are sensitive to cash rate changes, hence RBA rate movements have skyrocketed home loans over the last year. However, incremental changes like this despite no official rate changes indicate that banks may expect further hikes on the horizon.
Indeed, RBA governor Philip Lowe stated in his post-decision media address that further tightening measures may be necessary to cool inflation. Westpac and CBA have speculated that the RBA may have at least one more 0.25% top-up in store, which would bring the final cash rate to 3.85% in either May or June.
So how does this impact refinancers?
For those comparing variable interest rates, Mozo banking expert Peter Marshall warns not to hold your breath for meaningful drops anytime soon.
“Variable rates will just follow whatever the RBA does,” explains Marshall. “So if there’s one more increase, then variable rates will go up again.”
Fixed-interest home loans, on the other hand, give us a wider view of home loan costs.
“Fixed rates look to the future,” says Marshall. “For fixed rates, the pattern is generally that banks are increasing shorter one to three-year terms and decreasing four and five-year terms.”
Those decreases could point to a lower cash rate in a few years to come. So while we may not have hit the peak of the rate cycle, we’re likely very near it.
Compare refinancing rates for home loans below.