Westpac and Commonwealth Bank increase fixed rates

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Two of the big four banks have raised fixed interest rates on home loans. (Source: Getty)

The Commonwealth Bank and Westpac have both raised interest rates on fixed home loans in recent days by 0.1%, while ING has raised rates by 0.05%.

Westpac’s fixed rates at 2, 3, 4 and 5 years for homeowners paying principal and interest have increased by 0.1% each.

Westpac’s move comes as Australia’s largest lender, the CBA, on Friday decided to hike rates by 0.1% on its fixed 2-, 3- and 4-year mortgages.

At the same time, ING also raised its fixed rates from 0.05% to 0.2%.

Here are the new rates from Westpac, CBA and ING:

(Source: RateCity)

(Source: RateCity)

(Source: RateCity)

(Source: RateCity)

The BCA has changed rates at least twice this year, first in March and again in August, as banks expect a strong economic recovery.

For Australians with mortgages, it’s a sign that the era of record high interest rates is coming to an end, RateCity research director Sally Tindall has warned.

“These fixed rate hikes suggest that the days of super-cheap financing may be numbered,” she said.

Although the Reserve Bank has insisted it does not expect to increase the cash rate until 2024, many banks predict that it could move sooner than expected as lockdowns lift, that the borders reopen and the the economy “roars” back to life.

And while “the writing may be on the wall” for fixed rates, there are still options for Australians who want the best deal: there are over 150 fixed rates in the market below 2%, said Tindall.

For example, the Greater Bank has fixed 1-year rates at 1.59%.

“Prepare for higher interest rates”

Economists across Australia are warning that we will have to adjust to higher interest rates sooner than the RBA forecast.

In a column for Yahoo financeIndependent economist Stephen Koukoulas said a “significant acceleration in inflation” was triggering interest rate hikes for some central banks, including the Reserve Bank of New Zealand, which recently hiked rates for the first time in seven years.

RBA Governor Philip Lowe has insisted the conditions will not be right to raise rates until 2024; he should see inflation in the range of 2 to 3 percent.

“Our judgment is that this condition of increasing the cash rate will not be met until 2024,” Lowe said in mid-September.

But the banks do their own thing.

“Markets are ignoring this direction, with the start of the interest rate hike cycle starting to be fixed in the latter part of 2022, just 12 months away, and about two years before the RBA believes it will have to move,” Koukoulas wrote. .

Commonwealth Bank Australian Economic Director Gareth Aird believes the RBA will start raising rates sooner than it currently indicates.

“Our central scenario is that the RBA will begin to normalize the cash rate in May 2023. Global inflation results suggest that the risks are firmly on an earlier take-off in the cash rate.”

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