Fixed rates on the rise across 28 products - time to lock in your mortgage?
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.
READ MORE: Here’s the real reason why banks are lifting home loan interest rates
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.
RELATED: How will your budget be affected by the big bank rate rise?
“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.
*Product no longer exists (as of 17/12/2018)
* 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.
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