Fixed rates on the rise across 28 products - time to lock in your mortgage?
Article by Kelly Emmerton
With an RBA rate rise looming in the future, Mozo data has shown that borrowers thinking about fixing their home loan rate in order to lock in a great deal may need to act fast - that is, if they haven’t already missed the boat.
As it becomes increasingly likely that the RBA will lift the official cash rate sometime at the end of this year or next year, banks have begun pre-emptively hiking rates, particularly on fixed rate products.
“If you’re locking in a fixed rate for a term of longer than a year, then that’s a deal the banks won’t be able to adjust in 9 or 12 months, when the RBA increases rates. So they’re eager to inch fixed rates up as much as possible now,” explained Mozo Data Manager Peter Marshall.
So far, in this month alone, 15 lenders, including Bankwest, CUA and Heritage Bank have increased rates on fixed rate loans with terms between 1 and 5 years. The changes occurred across a spread of 28 home loan products for both owner-occupiers and investors, with many lenders increasing rates on multiple products and terms.
Average fixed rate increases
This is bad news for new borrowers or refinancers. For example, lender Resi increased four year fixed rates on its Smart Pro 95 loan by 0.31%. Customers opting for this loan will now pay as much as $2,350 more on a $350,000 loan over the four year term, than they might have if they’d locked in their rate a week ago.
“At this point, I’d expect more rate rises before any cuts. So the lesson to be learnt here, is that if choosing a fixed rate mortgage is your strategy to combat rising interest rates, then it may be better to act sooner, rather than later,” Marshall said.
Luckily, there are still some good fixed rate offers on the market that can secure Aussie borrowers great value for their money. For terms 1 - 4 years, there are even deals under 4% still available.Top value fixed rate loans
- 1 year - 3.59% (4.42% comparison rate) from Greater Bank
- 2 year - 3.59% (4.12% comparison rate) from Select Encompass Credit Union
- 3 year - 3.59% (4.01% comparison rate) from Easy Street
- 4 year - 3.75% (4.24% comparison rate) from BCU
- 5 year - 4.10% (4.37% comparison rate) from BCU
So if you want to avoid further bank rate hikes by fixing your home loan, head over to our home loan comparison tool to search the market and find some of the best offers around.