Big four banks join smaller lenders in fixed rate home loan hikes

Monday 28 November 2016

Article by Roisin Kelly-Goldsmith

The big news over the last few weeks has been around how smaller home loan lenders have increased their fixed rate home loans, while the Reserve Bank has left the cash rate unchanged at 1.50%.

The big news over the last few weeks has been around how smaller home loan lenders have increased their fixed rate home loans, while the Reserve Bank has left the cash rate unchanged at 1.50%.

Now, big four bank Westpac has joined the rate hike trend, lifting its fixed rate home loans by up to 0.60 basis points, bringing its fixed rates for 5 year terms up to 4.79% for investors and 4.59% for owner occupiers.

Update 2/12/16: The Commonwealth Bank has now joined the big banks hiking rates, raising its fixed rate mortgages by up to 0.15%, bringing the rate for a 5 year term to 4.74% for owner occupiers.

Overall, 14 providers have made out of cycle rate increases in the last 10 days, with lenders, such as ME Bank and UBank, citing the increasing cost of deposit funding as a large contributor to their decision.

According to Mozo’s Product Data Manager, Peter Marshall, the rate increases are far from over.

“Even if the RBA keeps the official cash rate as-is in December I expect that fixed rates and even some variable rates will start heading up over the summer holiday period,” he said.

While lenders have been inclined to hike interest rates lately, borrowers were given some respite. For instance, Suncorp cut rates on its one and five year fixed mortgages by 35 and 40 basis points respectively, for owner occupiers and investors last week.

Other banks in the good books include Qudos Bank who sliced rates today by up to 0.60 basis points for investor loans with four and five year terms. Smaller bank CUA will reduce one and two year fixed rate home loans on December 29 by 0.15 and 0.17 basis points respectively.

And the good news doesn’t end there. Our database shows that there are plenty of fixed interest rate bargains being offered in the market right now.

For instance, as our mortgage repayments calculator shows, a customer looking to take out a $500k home loan, will save $2,100 in a year if they go for the lowest 3 year fixed rate loan in our database at 3.49% rather than the average at 4.13% (repayments calculated over a 25 year term).

Looking for a home loan? Or want to refinance? Here are some tips:

  • Consider a split rate loan. If you like the sound of a loan that gives you the best of both worlds with a blended fixed and variable interest rate, a split rate loan option could be for you. That way, you’ll be affected less by future rate hikes thanks to the fixed rate portion, but you’ll also enjoy the flexibility that comes with the variable rate part of your loan.
  • Be in it for the long haul. Once you’ve signed up with a fixed rate loan, avoid refinancing in the fixed rate period, as hefty fees could apply.
  • Use a home loan negotiator. To quote our in house home loan and property expert, Steve Jovcevski, he can negotiate better rates than brokers! Fill out a contact form here, for an obligation-free callback.

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