Triple rate hike: Shock as Australia’s big bank deals blow ahead of RBA – realestate.com.au

One of Australia’s biggest banks has dealt homebuyers a body blow with the equivalent of a threefold interest rate hike, pushing up the cost of a normal mortgage repayment by hundreds of pounds.

The Commonwealth Bank, Australia’s largest, raised its fixed interest rates by up to 0.70 percentage points – the same as if the Reserve Bank were to hike three times in a row.

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CBA is the largest bank in Australia and an industry influencer. Photo: Lisa Maree Williams/Getty Images.

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The bank’s brutal repricing sent the three-year rate shooting up 0.70 points from 5.34 percent to 6.04 percent, helping previously stuck borrowers dodge a financial bullet.

The one-year term offer was increased by 0.45 points to 5.94 per cent – ​​an increase almost double a normal Reserve Bank move – with CBA’s lowest fixed home loan now at 5.79 per cent for a two-year term. Both the four- and five-year terms were extended by 0.30 points to 6.09 percent and 6.24 percent, respectively.

Macquarie Bank has also joined the carnage with its second rate hike in six weeks, adding another 0.25 percentage points across all fixed maturities.

The fixed rate carnage comes as banks prepare for the Reserve Bank to potentially hike cash rates at its February meeting. Canstar data shows that as many as 34 lenders have increased at least one fixed rate in the last month alone.

With just one 0.25 point rate increase, a typical $600,000 mortgage payment would increase by $90 per month, Canstar’s analysis found, while a $750,000 loan would increase by $112, and $1 million mortgages would cost an extra $150 per month.

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CBA has implemented fixed interest rate changes as of today. Source: Canstar

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Canstar.com.au data insights director Sally Tindall said borrowers who had been hesitant to pay down their loans were now paying the price.

“CBA’s lowest fixed interest rates are now higher than those of major bank competitors across all terms,” she says. “It’s a big change from last year, when the bank offered a two-year special at 4.99 percent. Now CBA’s lowest two-year fixed rate is a less-than-attractive 5.79 percent.”

Ms Tindall said: “While the majority of borrowers are on variable rates, anyone considering a solution may feel like they have missed the boat. The fixed rate tide is dying out.”

Canstar Data Insights director Sally Tindall.

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Number of lenders with at least one fixed rate below 5%. Source: Canstar

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But she said there are “still a few lenders” offering interest rates below 5 percent.

“How long they last is another question.”

Smaller lenders with interest rates in the mid-four include Pacific Mortgage Group and Geelong Bank with one-year fixed rates from 4.99 per cent, while some credit unions offer two-year terms from 4.94 per cent.

“The list of lenders offering fixed interest rates starting with a ‘4’ could be down to single digits by the time the next RBA meeting takes place,” Ms Tindall said.

NAB now has the cheapest fixed rates of the big four, at 5.39 per cent for both one-year and two-year terms – a whopping 0.55 percentage points cheaper than CBA’s one-year rate.

The RBA board will announce its interest rate decision on February 3.