NAB and ANZ hit borrowers with fixed rate hikes - are more banks set to follow?

Fifty-five home loan providers have flooded Mozo’s database with fixed interest rate increases since the trend started gaining momentum back in October, 2016. That means there are just 23 mortgage lenders left that are yet to move fixed rates up.

While big banks CommBank and Westpac lifted fixed rates in November, it wasn’t until the first few weeks of 2017 that NAB and ANZ followed suit by increasing a number of fixed rates on terms over one year.

NAB hitched two year Tailored Home Loan packaged rates for owner occupiers by 23bp to 3.98%, three year rates by 20 basis points to 4.09%, while four year rates rose 60bp to 4.59%.

However, on the same home loan package the big four bank deviated from the fixed rate hike trend by shaving 10bp off one year rates. NAB’s rate changes kicked in on January 15.

According to NAB’s Chief Operating Officer, Antony Cahill, Aussie banks need to increase mortgage rates for borrowers due to funding costs.

“There are a range of factors that influence the funding that NAB – and all Australian banks – source, so we can provide home loans to our customers,” he said.

ANZ recently applied rate increases to its Fixed Rate Breakfree Package loans for owner occupiers. It lifted two year rates by 23 basis points to 3.98% and pumped three year rates up 34bp to 4.19%. But in a positive twist, ANZ shaved 10bp off four year packaged fixed rates, bringing them down to 4.59%. These rate changes were made effective on January 13.

Apart from ANZ applying a small reduction to its four year fixed rates, Mozo’s Product Data Manager, Peter Marshall said that fixed rate hikes in 2017 had been highly predictable.

“Providers have been cutting shorter term rates to attract new customers looking for fixed rate loans, while discouraging too many borrowers from locking them in for several years,” he explained.

Marshall believes that the RBA will raise the cash rate by 25 basis points at least twice this year, making it highly likely that those 23 providers yet to raise rates will follow suit.

“I expect that in a year's time the fixed rates available now will be a distant memory,” added Marshall.

Best fixed rates

With experts warning that fixed rates will continually rise, now could be the time to consider locking your rate in over a longer term. Here’s a snapshot of the top rates for more than one year available now...

• 2 years - 3.64%, Homestar

• 3 years - 3.59%, Easy Street

• 4 years - 3.75%, BCU*

• 5 years - 4.10%, BCU*

Ready for a new fixed rate to protect yourself from further hikes? Use our comparison hub where all interest rates and features are laid out for you to browse through.

*No longer exists (12/17/2018)