Commonwealth Bank and Westpac have hiked their fixed interest rates today, with both banks expected a further RBA hike. (Source: AAP)
Two of Australia’s biggest banks, Commonwealth Bank and Westpac, have today hiked their fixed home loan interest rates. The increases come ahead of expectations the Reserve Bank of Australia (RBA) will lift the cash rate even higher, as inflation comes in hotter than expected.
Commonwealth Bank has increased all of its fixed rate terms by 0.25 percentage points, marking the second time in six weeks it has lifted rates. Westpac has similarly increased its fixed rates by up to 0.30 percentage points.
Commonwealth Bank’s lowest fixed rates now start with a 6, with its 2-year fixed rate the lowest offered at 6.04 per cent. Westpac’s move means only its 1, 2, and 3-year rates still start with a 5, with its 1-year fixed rate its lowest at 5.79 per cent.
RELATED
Canstar data insights director Sally Tindall said the fresh round of increases were in response to elevated fixed rate funding costs, along with an expectation that “this is not the end of the cash rate hikes”.
“Competition in the fixed rate space, and the near-anaemic appetite from customers to lock in their home loan rate is also likely to have played a role,” she said.
Since the RBA hiked the cash rate to 3.85 per cent at the start of the month, Canstar found around 60 lenders had hiked at least one of their fixed rates.
“We expect this trend will continue as the possibility of further cash rate hikes continues to ramp up,” Tindall said.
All of the Big Four banks passed on the 0.25 per cent hike to variable customers in full, with the hike adding about $90 to the monthly repayments of a typical $600,000 mortgage with 25 years remaining.
Do you have an interest rates story to share? Contact tamika.seeto@yahooinc.com
Commonwealth Bank, NAB and Westpac expect the RBA will hike the cash rate again in May to 4.1 per cent.
Inflation has again come in hotter than expected, with the consumer price index coming in at 3.8 per cent in the 12 months to January. This was unchanged from December.
The RBA’s preferred measure of consumer prices, trimmed mean inflation, ticked up to 3.4 per cent, up from 3.3 per cent in December.
The biggest contributor to annual inflation was housing, up 6.8 per cent, which reflected cost rises in electricity, new dwellings and rents.
Bendigo Bank chief economist David Robertson said inflation would still be viewed as “far too high” by the RBA. But he said the data doesn’t necessarily translate to another hike at the March meeting.