The last bank offering a four-year fixed rate below 2 per cent has increased its rate, suggesting the ultra low rate environment is beginning to expire.
BankVic has announced its four-year fixed home loan rate will increase from 1.95 per cent to 2.29 per cent, meaning no lenders now offer similar products with rates below 2 per cent.
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At the beginning of 2020, 32 lenders offered four-year products with rates below 2 per cent.
“A number of record low rates have been relegated to the history books over the last two months, as lenders took some of the lowest rates off the table,” RateCity.com.au research director Sally Tindall said.
“There are now just two rates that are still at record lows – Reduce Home Loan’s variable rate at 1.77 per cent and BCU’s 1-year fixed rate at 1.67 per cent. All the other lowest rates have been hiked.
“We expect more fixed rates will rise after the Reserve Bank of Australia’s term funding facility wraps up at the end of this month and we edge closer to the next cash rate hike.”
Banks move on interest rates
While most lenders are keeping rates low, longer term products are beginning to see their interest rates click higher.
Some 25 lenders have increased their five-year fixed rates while four have cut in the last two months.
For shorter term loans, lenders are still generally pushing rates lower.
Most (27) lenders have cut their two-year fixed rates, while only 8 have hiked, and 15 lenders have cut their three year fixed rates, while 11 have hiked those products.
Across variable rates, 31 lenders have cut at least one variable rate.
However, there are still dozens of products with shorter terms offering interest rates below 2 per cent.
There are 36 one-year fixed rates below 2 per cent, and another 78 two-year fixed rates and 52 three-year fixed rates.
In total, there are 189 home loan products on the RateCity database with sub-two per cent interest rates.
“Mortgage holders are still spoilt for choice,” Tindall said.
Who has the lowest rates?
BCU has both the lowest one- and two-year fixed rates, at 1.67 per cent and 1.78 per cent respectively.
For three-year fixed rates, Credit Union SA has the lowest rate at 1.79 per cent, while Hume Bank’s 2.04 per cent is the lowest four-year fixed rate.
ANZ/UBank offers the lowest five-year fixed rate at 2.24 per cent, and Reduce Home Loans’ 1.77 per cent is the lowest variable rate on offer.
Across the major banks, Westpac’s 1.79 per cent two-year fixed rate is the lowest on offer.