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CBA, Westpac hike home loan rates for new customers

Commonwealth Bank and Westpac have increased variable rates for new customers.

Commonwealth Bank (CBA) and Westpac.
CBA and Westpac have announced rate hikes for new home loan customers. (Source: Getty)

Two of Australia’s biggest banks - Commonwealth Bank and Westpac - have hiked selected home loan rates for new customers, and one has also cut some fixed rates.

CBA has increased the rates on its package variable home loan - which includes an offset account - by up to 0.12 per cent. This marks the second time in two weeks the bank has increased rates on the loan - hiking rates by up to 0.22 per cent in total.

Rival bank Westpac also hiked selected variable rates yesterday, increasing its basic home loan by 0.10 per cent for new owner-occupiers and investors. Meanwhile, NAB and ANZ hiked select variable rates for new customers last month.

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RateCity research director Sally Tindall said it was likely getting too expensive for the big banks to hand out discounts.

“At the start of the RBA hikes, the Big Four banks cut new customer rates repeatedly in a bid to bring in new business. This aggressive discounting is now in reverse,” Tindall said.

“After 10 cash rate hikes and steep increases to wholesale funding globally, the big banks are now quietly slipping their biggest discounts off the table.

“While the refinancing boom has driven banks - big and small - to offer competitive new-customer rates, the unprecedented volume of loans now refinancing is no doubt putting added pressure on profit margins.”

Westpac has the lowest variable rate among the Big Four banks. However, it is only an introductory offer, jumping up by 0.40 per cent after two years.

CBA cuts 3-year fixed rates

There’s potential good news for those considering a fixed-rate home loan, with CBA slashing its 3-year fixed rate loan today by 0.40 per cent.

Tindall said the tide was “starting to turn” with more lenders cutting fixed rates as we approached the cash rate peak. According to RateCity, 16 lenders have cut fixed rates in the past two weeks, while eight have hiked rates.

But borrowers don’t seem to be rushing to fixed-rate loans, with the latest ABS lending indicator showing just 5 per cent of new and refinanced loans were fixed in February.

“With many economists predicting cash rate cuts in the next couple of years, it’s no surprise many Australians are deciding to keep their options open with a variable rate,” Tindall said.

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