The Commonwealth Bank has hiked its two- and four-year fixed rates by 0.05 per cent in a move that will leave many Australians “kicking themselves”.
The interest rate hikes apply to owner-occupiers paying principal and interest and marks the third time CommBank has increased its four-year rate since the beginning of the year.
It’s the first time it has increased its owner-occupier two-year rate. The new two-year fixed rate is 1.99 per cent, while the new four-year rate is 2.29 per cent. The changes do not impact currently held loans.
"These changes reflect increasing funding costs and the broader economic recovery which is on-track despite the current restrictions," a Commonwealth Bank spokesperson said.
Customers experiencing financial hardship should contact the bank for support, as there are mortgage moratoriums available, the spokesperson added.
“While a 0.05 per cent hike isn’t much in the scheme of things, anyone who was planning to lock in one of these rates, but hadn’t, could be kicking themselves today,” RateCity.com.au research director Sally Tindall said.
“CBA is factoring in a rise in the cost of funding over the next couple of years, particularly now the RBA’s term funding facility has closed.”
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However, Tindall said it’s unlikely the bank will move quickly to take its two-year fixed rate above 2 per cent.
“CBA’s two-year rate was extremely competitive and attracting significant interest. By keeping it just under 2 per cent, the bank is trying to keep momentum going at a more sustainable price,” she said.
“Sixty-five lenders are offering at least one rate under 2 per cent. It’s a great marketing tool to get new customers in, particularly refinancers looking to lock in a fixed rate that starts with a ‘1’.”
The rate hike comes as homeowners refinanced some $16.24 billion in June, taking the 12-month total to $151.2 billion.
That means 314,934 mortgages have been refinanced.
RateCity analysis found the average homeowner would have saved $10,430 in interest over two years by switching from an existing 3.08 per cent rate to a new 1.95 per cent rate.
“At the start of COVID, we saw a spike in refinancing as people rushed to lock in a competitive rate. COVID was a wake-up call for people to get their finances in order, and banks were at the ready, handing out some of the lowest rates in history,” Tindall said.
“Over a year later and we’ve now hit a new record high, although this time, the surge is more likely to be fuelled by a fear of missing out.”