RBA fixed rate mortgage shock intensifies
It’s really out of the box now:
Westpac raised fixed rates for the third time in four weeks, as major banks pull back from record lending rates, eagerly snatched by borrowers.
The big bank decided to raise rates for homeowners and investors, leaving no loan offers below 2.24 percent.
Westpac’s three-year fixed rate loan saw the largest increase in borrowing costs, up 0.3%.
Almost four rate hikes in one month. Well done, RBA.
There is no data on the extent of the use of fixed rate mortgages during the last boom, but the anecdotal evidence is that it was very high.
While those on these rates aren’t about to experience reset shocks for about a year, the average loan amount available to borrowers will simply have been truncated. Especially when we add higher APRA credit buffers.
The rise in house prices will slow down a lot and one wonders if this has not already affected the outlook for households:
ANZ-Roy Morgan Aus Consumer confidence fell 2.8%. Inflation expectations could weigh on, given the headlines following the rise in the US CPI. Weekly inflation expectations and its 4-week moving average rose 0.1ppt to 5.0%. #ausecon @ DavidPlank12 @RoyMorganAus pic.twitter.com/8egQUyS4kM
– ANZ_Research (@ANZ_Research) November 15, 2021
Nothing upsets the Australian economy like rising interest rates.