Yahoo Finance Interest rates hiked by Aussie bank ahead of RBA meeting
UBank, which is part of NAB, has hiked variable home loan rates and cut fixed rates.
The Reserve Bank (RBA) is expected to hold interest rates when it meets next week, but that hasn’t stopped one Aussie bank from jumping in and changing its home loan rates.
UBank, which is owned by NAB, has today increased its variable home loan interest rate by between 0.05 and 0.10 percentage points. This rate hike applies to new customers only.
The move means UBank’s lowest advertised variable rate is now 6.14 per cent, which makes it higher than at least 25 lenders who are offering rates under the 6 per cent mark.
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At the same time, the Aussie bank has slashed select 1-, 2-, 3- and 5-year fixed rates by up to 0.65 percentage points. This takes its lowest 3-year fixed rate down to 5.99 per cent.
RateCity research director Sally Tindall said UBank wasn’t the only lender moving variable rates up and pushing fixed rates down.
“While the Big Four banks have been extremely quiet over the last three months, other lenders have been busy tinkering with their home loan offerings, particularly fixed rates,” Tindall told Yahoo Finance.
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RateCity’s database shows that 29 lenders have cut at least one fixed rate, while four have increased fixed rates over the past month. Tindall said the cost of fixed-rate funding had started to ease and many economists were predicting a rate cut in the next six months.
Meanwhile, there have been 13 lenders to cut at least one variable rate and 19 to increase variable rates over the same period.
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Banks’ competitive mindset ‘starting to wane’
Tindall said variable rate hikes were likely the result of competitive pressures on lenders’ interest margins.
“Over the last few months, some lenders have made [a] conscious effort to keep at least one variable rate under 6 per cent,” she said. “However, this competitive mindset is starting to wane.
“As a result, the list of lenders offering at least one variable rate under 6 per cent is starting to thin out.”
Tindall also noted more lenders were offering at least one fixed rate that was lower than their lowest variable rate, which had not been the case over the past couple of years.
RBA expected to hold interest rates
While the RBA has not ruled out further cash rate hikes if necessary, the central bank is expected to hold rates when it meets on Monday and Tuesday next week.
Inflation remained at 3.4 per cent in the 12 months to January, unchanged from December. That’s much lower than the high of 8.4 per cent recorded in December 2022.
The RBA expects inflation will fall to its 2-3 per cent target range in 2025 and reach the midpoint in 2026.
