Big Four banks make major fixed interest rate hikes ahead of looming RBA decision
Buyers, brace yourselves. Commonwealth Bank, Westpac, NAB, and ANZ have all sharply escalated their fixed rate home loan offers in the last two weeks alone, suggesting the big banks expect a significant move from the Reserve Bank of Australia (RBA) this July.
The adjustments affect both owner-occupier and investment standard fixed home loans for all four banks, with CommBank lifting interest rates by an eye-watering and virtually unheard of 140 basis points on all fixed terms. Meanwhile, ANZ and Westpac moved all terms by 90 bp and 50 bp respectively, and NAB announced 80-110 bp rises for terms on its Tailored Home Loan.
The table below shows the new interest rates for owner-occupiers making principal & interest repayments on standard fixed rate home loans with an LVR < 80%.
New fixed interest rates for Commonwealth Bank, Westpac, and ANZ standard home loans - 1 July 2022
Terms | CommBank | ANZ | NAB | Westpac |
1-year | 5.14% p.a. (5.44% p.a. comparison rate*) | 4.69% p.a. (3.84% p.a. comparison rate*) | 4.79% p.a. (5.35% p.a. comparison rate*) | 4.39% p.a. (5.37% p.a. comparison rate*) |
2-year | 5.94% p.a. (5.57% p.a. comparison rate*) | 5.49% p.a. (4.07% p.a. comparison rate*) | 5.69% p.a. (5.48% p.a. comparison rate*) | 5.09% p.a. (5.42% p.a. comparison rate*) |
3-year | 6.54% p.a. (5.80% p.a. comparison rate*) | 5.89% p.a. (4.32% p.a. comparison rate*) | 5.89% p.a. (5.57% p.a. comparison rate*) | 5.49% p.a. (5.51% p.a. comparison rate*) |
4-year | 6.74% p.a. (5.97% p.a. comparison rate*) | 5.99% p.a. (4.53% p.a. comparison rate*) | 6.29% p.a. (5.77% p.a. comparison rate*) | 5.59% p.a. (5.56% p.a. comparison rate*) |
5-year | 6.84% p.a. (6.12% p.a. comparison rate*) | 6.09% p.a. (4.74% p.a. comparison rate*) | 6.39% p.a. (5.89% p.a. comparison rate*) | 5.69% p.a. (5.62% p.a. comparison rate*) |
Changes to interest rates reshuffle the pecking order of the Big Four, with Westpac’s fixed rate home loan terms now showing 0.85% cheaper than CommBank’s.
Big Four fixed rate home loans comparison (OO, P&I) - 1 July 2022
Bank | Offer | 2-year rate | 5-year rate |
Westpac | Fixed Options | 5.09% p.a. (5.42% p.a. comparison rate*) | 5.69% p.a. (5.62% p.a. comparison rate*) |
ANZ | Fixed Rate | 5.49% p.a. (4.07% p.a. comparison rate*) | 6.09% p.a. (4.74% p.a. comparison rate*) |
NAB | Tailored Home Loan | 5.69% p.a. (5.48% p.a. comparison rate*) | 6.39% p.a. (5.89% p.a. comparison rate*) |
CBA | Fixed Rate | 5.94% p.a. (5.57% p.a. comparison rate*) | 6.84% p.a. (6.12% p.a. comparison rate*) |
CommBank paired its massive fixed rate hike with a minor 15 bp variable rate cut to some of its Extra Home Loan offers (<70% and 70-80% LVR tiers), suggesting they’re still hoping to remain attractive to customers for their variable home loans.
However, variable rate home loans on the whole have been rising in tandem with the official cash rate. With another 50 bp cash rate bump expected in July, the cost of housing finance is poised to have surged more than 1% in the last two months.
“For every percentage point increase in interest rates, that will mean more and more people will experience financial stress,” explained Financial Counselling Australia representative Fiona Guthrie in a comment to the ABC. “And the larger the group of people, the bigger that reverberates through the whole of the economy.”
Plugging a similar increase into our rate change calculator shows just how much these latest hikes can affect monthly repayments, upticking by $200 or more.
Loan details
Repayment change if rates go up
Unless property prices see some meaningful falls, many first home buyers may now find their borrowing power significantly reduced. Those hoping to break in – and stay in – will therefore need to be on the lookout for ultra competitive rates.
What do rate hikes mean for the economy and property market?
Since March, interest rates from the Big Four have been steadily climbing in both anticipation and response to the RBA. Back then, 1-year terms with CBA sat at just 2.94% p.a. (4.54% p.a. comparison rate*) – 2.2% cheaper than today. Now, fixed rates have now been pushed in excess of pre-pandemic levels to heights unseen since 2015.
Variable rate home loans have similarly skyrocketed after experiencing a welcome reprieve of cuts in the beginning of the year. Banks typically lowered variable interest rates to entice customers put off by fixed rises, but with both categories surging, borrowers may feel like they have no good options left.
“This is quite unusual, what’s going on at the moment,” explains Mozo expert spokesperson Peter Marshall. “The Reserve Bank had previously been telling people rates wouldn’t go up until 2024, but all of a sudden they’re implementing a particularly steep round of rate hikes. So it is taking a lot of people – including the big banks – by surprise.”
With the Big Four responding to the RBA’s aggressive mindset, Marshall says consumers should expect them to go quite hard, with further rate hikes looming in the months ahead.
“Everyone’s anticipating rates will go as high as 6% to 7%, and it’s certainly not out of the question,” he explains. “Someone with savings and no loan might be cheering that idea, but there’s plenty of risk in the world economy at the moment, so I don’t think the Reserve Bank’s path forward is as clear as they think or say it is.”
“If they hike rates too fast, they may well just cause everyone to close their wallets, stop spending, and crush the housing market.”
RELATED: What is monetary policy, and how can it help you?
Property price drops would certainly be welcome news to both the RBA and hopeful buyers, but homeowners may be facing a significant loss of equity if rates fly too high. A loss like this would ultimately make refinancing to avoid rate hikes that much harder.
“Someone who bought a year ago may find their borrowing power has reduced already,” warns Marshall. “So refinancing may not be an option for everyone.”
How can mortgage borrowers best handle the latest round of rate hikes?
While it’s easy to get swept up in the doom and gloom, there are still strategies buyers can take to manage the cost of financing a home.
“If you’ve got an offset account, put in every little bit of money that you’ve got,” advises Marshall. “It’s absolutely the best way to save on interest.”
For those who don’t have offset accounts available to them, Marshall recommends they still consider refinancing.
“If you can refinance, definitely have a look around, check your current rate, and see if you can get something better,” Marshall encourages. “There are still some okay fixed rates around, but you have to look at smaller lenders. Search for the little guys who still have decent options available.”
Yet another victory for David against Goliath.
Stay on top of rate changes with our new RBA rate tracker. For more market insights, subscribe to our weekly Moneyzone newsletter.
Compare low interest home loans - last updated 19 March 2024
-
Featured Product
Mozo experts choice awards won:
- Low Cost Home Loan - 2024
Unloan Variable
Owner Occupier, Refinance Only, LVR <80%
interest rate
comparison rate
Initial monthly repayment5.99% p.a. variable5.90% p.a.For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.
CompareCompareUnloan Variable
For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.
- interest rate
- 5.99% p.a. variable
- comparison rate
- 5.90% p.a.
- interest rate
- 5.99% p.a. variable
- comparison rate
- 5.90% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $10,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Unloan Unloan Variable
-
Neat Home Loan
Owner Occupier, Principal & Interest, LVR <60%
interest rate
comparison rate
Initial monthly repayment6.14% p.a. variable6.16% p.a.Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.
CompareCompareNeat Home Loan
Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.
- interest rate
- 6.14% p.a. variable
- comparison rate
- 6.16% p.a.
- interest rate
- 6.14% p.a. variable
- comparison rate
- 6.16% p.a.
- Upfront fees
- $250
- Ongoing fees
- $0.00
- Discharge Fee
- $300.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 60.00%
- minimum borrowing amount
- $80,000
- maximum borrowing amount
- $5,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the ubank Neat Home Loan
-
Offset Home Loan
Package, Owner Occupier, LVR<60%, Principal & Interest
interest rate
comparison rate
Initial monthly repayment6.15% p.a. variable6.40% p.a.Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.
CompareCompareOffset Home Loan
Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.
- interest rate
- 6.15% p.a. variable
- comparison rate
- 6.40% p.a.
- interest rate
- 6.15% p.a. variable
- comparison rate
- 6.40% p.a.
- Upfront fees
- $350
- Ongoing fees
- $248.00 yearly
- Discharge Fee
- $400.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 60.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Macquarie Offset Home Loan
-
Featured Product
Ultra Low Rate <95% LVR
Owner Occupier, Principal & Interest
interest rate
comparison rate
Initial monthly repayment6.30% p.a. variable6.58% p.a.Only 5% deposit required to apply. Low upfront costs to pay. No LMI Required. Unlimited Redraw and additional repayments. No Application or ongoing fees. No guarantors or equity sharing required.
CompareCompareUltra Low Rate <95% LVR
Only 5% deposit required to apply. Low upfront costs to pay. No LMI Required. Unlimited Redraw and additional repayments. No Application or ongoing fees. No guarantors or equity sharing required.
- interest rate
- 6.30% p.a. variable
- comparison rate
- 6.58% p.a.
- interest rate
- 6.30% p.a. variable
- comparison rate
- 6.58% p.a.
- Upfront fees
- $790
- Ongoing fees
- $0.00
- Discharge Fee
- $795.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 95.00%
- minimum borrowing amount
- $350,000
- maximum borrowing amount
- $2,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Sucasa Ultra Low Rate <95% LVR
-
Straight Up
Obliterate, Owner Occupier, Principal & Interest, <50% LVR
interest rate
comparison rate
Initial monthly repayment6.24% p.a. variable6.24% p.a.Get a low variable rate depending on your deposit with Athena’s Straight Up Variable Home Loan. AcceleRATES feature helps you to reduce your home loan even faster (T&Cs apply). Zero fees to pay. Free redraw facility. Handy mobile app to manage your home loan.
CompareCompareStraight Up
Get a low variable rate depending on your deposit with Athena’s Straight Up Variable Home Loan. AcceleRATES feature helps you to reduce your home loan even faster (T&Cs apply). Zero fees to pay. Free redraw facility. Handy mobile app to manage your home loan.
- interest rate
- 6.24% p.a. variable
- comparison rate
- 6.24% p.a.
- interest rate
- 6.24% p.a. variable
- comparison rate
- 6.24% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 50.00%
- minimum borrowing amount
- $100,000
- maximum borrowing amount
- $2,500,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Athena Straight Up
Your selected home loans
Your selected home loans
Your selected home loans
Your selected home loans
Your selected home loans
* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
^See information about the Mozo Experts Choice Home Loan Awards
Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.
While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.