Two of Australia’s biggest banks have raised their fixed home loan interest rates ahead of the Reserve Bank’s monthly interest rate decision.
Commonwealth Bank and NAB announced lifting select rates for new customers amidst wide expectations of another cash rate increase on Tuesday next week.
CBA, Australia’s biggest lender, increased the variable rate on its no-frills home loan for new owner-occupiers and investors with deposits of 30%. It also hiked its one- to three-year fixed rates for owner-occupiers and investors.
Below is CBA’s new customer rate changes for owner-occupiers paying principal and interest:
|
Product
|
Old rate
|
New rate
|
Change
|
|---|---|---|---|
|
CBA Extra Home Loan (variable)
(under 70% loan-to-value ratio)
|
5.12%
|
5.22%
|
+0.1%
|
|
1-year fixed
|
5.59%
|
5.99%
|
+0.4%
|
|
2-year fixed
|
5.99%
|
6.09%
|
+0.1%
|
|
3-year fixed
|
5.79%
|
5.99%
|
+0.2%
|
Source: RateCity.com.au. Note: above fixed rates are for borrowers taking out a package home loan with a $395 annual fee.
NAB increased its basic variable home loan for new customers deposits of 20% cent or less by 0.2% to 6.44%. The rates for new customers with bigger deposits remain the same.
Sally Tindall (pictured above), RateCity.com.au research director, said CBA’s fixed rate increases came as no surprise and may have been triggered by cost of funding pressures, plus the widespread expectation of three more cash rate hikes in as many months.
“Today’s increase to the bank’s lowest no-frills home loan is unexpected, however, the bank still has competitive advertised rates for borrowers looking for an offset account,” Tindall said. “CBA isn’t walking away from competition in the variable home loan space. The bank is just pushing customers in a different direction. The bank might have increased its basic home loan to rates from 5.22%, yet it’s still offering deals as low as 5.07% for people looking for an offset account, although it does come with a $395 annual fee.”
She said NAB’s increase to its basic variable rate for borrowers with deposits of less than 20% is a blow for would-be buyers looking to take out one of these loans and urged borrowers with smaller deposits to shop around.
“All four big banks charge customers with small deposits higher rates because they’re seen as riskier borrowers. However, the difference even within the big four is stark,” Tindall said. “While most banks sting low deposit customers with higher interest charges, there are still a handful of lenders offering rates under 5% for those with little equity.”
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