Home buyers or owner occupiers looking to lock in a fixed-rate mortgage were hit with a big jump today.
One of Australia’s biggest banks has dealt a blow to homebuyers with a threefold price hike, adding hundreds to the cost of a typical mortgage.
The Commonwealth Bank, Australia’s largest, has raised its benchmark rates to 0.70 per cent – the third consecutive increase by the Reserve Bank.
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CBA is Australia’s largest bank and industry influencer. Photo: Lisa Maree Williams/Getty Images.
The bank’s aggressive rate cuts pushed its three-year fixed rate of 0.70 basis points from 5.34 percent to 6.04 percent, leaving previously locked-in borrowers dodging the funding bullet.
Its one-year yield was increased by 0.45 basis points to 5.94 per cent – a rise that is almost double the Bank’s normal rate – and the lowest CBA loan is now 5.79 per cent for a two-year period. Both its four- and five-year periods were increased by 0.30 points to 6.09 percent and 6.24 percent respectively.
Macquarie Bank has also joined the carnage with its second rise in six weeks, adding another 0.25 percentage points on an all-constant basis.
The bleeding in fixed rates comes as banks prepare for the Bank to raise interest rates at its February meeting, as Canstar data shows 34 lenders raised at least one fixed rate in the past month alone.
With an interest rate increase of just 0.25 basis points, payments on a typical $600,000 loan would jump by $90 a month, Canstar analysis found, while a $750,000 loan would increase by $112, and a $1 million loan would face an extra $150 a month in fees.
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CBA has introduced fixed rate changes effective today. Source: Canstar
Canstar.com.au data director Sally Tindall said borrowers who were reluctant to refinance their loans were now paying the price.
“CBA’s low fixed rates are now higher than most of the major banks on all terms,” he said. “It’s a big change from last year when the bank was offering a two-year offer at 4.99 percent. Now CBA’s lowest two-year fixed rate is below 5.79 percent.”
Ms Tindall said “while most borrowers are flexible, anyone who has been thinking about restructuring may feel like they have missed the boat.
Canstar Data Insights director Sally Tindall.
Number of lenders with at least one fixed rate below 5pc. Source: Canstar
But he said there’s still “disruption of lenders” offering rates below 5 percent.
“How long they will hold on is a different question.”
Small lenders with rates in the four companies include Pacific Mortgage Group and Geelong Bank with one-year fixed rates from 4.99 per cent, while several credit unions are offering two-year terms from 4.94 per cent.
“The list of lenders offering fixed rates starting with ‘4’ could drop to single digits by the time the next RBA meeting comes around,” said Ms Tindall.
NAB now has the cheapest mortgage rates among the big four, offering 5.39 per cent on both one-year and two-year terms – which is 0.55 percentage points cheaper than CBA’s one-year rate.
The RBA board will announce an interest rate decision on February 3.
