Some fixed-rate home loans with the big bank have increased, less than 24 hours after Westpac announced similar changes.
The Commonwealth Bank of Australia (CBA) has revealed that since last week (November 5) fixed interest rates on a number of its home loans have risen, with one-year fixed rates increasing by 35 percentage points. based.
As confirmed by the big bank, these changes, which took effect on November 5, will see fixed one-year rates on loans with principal and interest repayment rise above their previous rate (which was below the threshold of 2%) to 2.34%. cent per annum (comparison rate of 4.13 per cent per annum).
The three- and four-year rates have also increased, now at 2.69 percent per year (comparison rate 3.97 percent per year) and 2.89 percent per year (comparison rate 3.95 per year). cent per year) – an increase in the base 40 and 50 points, respectively.
These changes also reflect an increase in the ABC swap rate, with one-year rates increasing 0.24%, two-year rates 0.57%, three-year rates 0.65%, four-year rates of 0.62% and five-year rates of 0.57% between October 1 and November 4.
An ABC spokesperson said in a statement to The Adviser that the move reflected “the sharp rise in funding costs in recent weeks as well as revised economic forecasts.”
Last week (November 2), the Reserve Bank of Australia (RBA) confirmed that the cash rate will remain at 0.1% for the month.
RBA Governor Philip Lowe said at the time that the central bank had adjusted its inflation forecast and now estimates it will hit 2.25% in 2021 and 2022, and 2.5% in 2023.
However, Mr. Lowe asserted that the RBA would not increase the cash rate until inflation was “durably within the target range of 2-3%”.
The CBA changes come less than 24 hours after Westpac also announced it would increase its fixed interest rates.
On November 4, the big bank confirmed that it would increase its three-year fixed rate for homeowner loans with principal and interest to 2.29% per annum (benchmark rate of 3.38% per annum), or an increase of 21 basis points.
The four- and five-year fixed rates have also increased, both increasing by 10 basis points to 2.69% (comparison rate of 3.44% per annum) and 2.99% (comparison rate of 3. 53% per year) respectively.
In a statement, a spokesperson for the Big Four Banks said: “Westpac continues to offer its customers competitive interest rates on home loans on both variable and fixed rate products.
“We also continually review our mortgage products in light of changing business and market conditions. In making these decisions, we take into account several factors, including the need to manage price changes in a sustainable manner. “
Speaking about Westpac rate changes, WLTH lending officer Catherine Mapusua said that with improving economic conditions and “banks scrambling to announce interest hikes,” it is wise to “start. to prepare for this change in the interest rate environment “.
“It’s important to determine if a fixed rate is right for your needs, as it may restrict additional repayments and may charge a break-up fee if your circumstances change. If you change banks, sell the property, or have to break your repayment rate, you risk costs that can range from a few hundred to several thousand, ”Ms. Mapusua said.
She added that some borrowers might consider paying a lock-in fee for a fixed rate, as this would “protect” them from rate increases before the loan is advanced, adding that others may wish to secure part of their mortgage. “As soon as possible to ensure [they] can continue to make payments.
At the time of writing, the National Australia Bank (NAB) had the lowest three-year fixed rate of the Big Four, offering 2.28% per annum (3.91% per annum), while the Australia New Zealand Banking Group (ANZ) had the highest at 2.39 percent per year (comparison rate of 3.27 percent per year).
Macquarie Bank also recently announced changes to its fixed rates, effective last week (November 1), increasing one- and two-year homeowner loans with principal and interest to 2.24% per annum, with a comparison rate of 2.24%. per year (for loans with an LVR of 80 percent or less).
For one- and two-year investment loans with principal and interest, this rate has increased to 2.54% per annum, with a respective comparison rate of 2.40% and 2.42% per annum (with a LVR of 70% and less).
[Related: RBA calls November cash rate]
Sam Nichols is a reporter for The Adviser and Mortgage Business. His reporting has featured in various media including ABC News, SBS’s The Feed and VICE.