Westpac’s 2-, 3-, 4- and 5-year fixed rates for owner-occupiers paying principal and interest have risen by 0.1 per cent apiece.
Westpac’s move comes as Australia’s largest lender, CBA, moved on Friday to lift rates by a similar 0.1 per cent for its 2-, 3- and 4-year fixed home loans.
Meanwhile, ING has also lifted its fixed rates by 0.05 per cent to 0.2 per cent.
Here are Westpac, CBA and ING’s new rates:
For Aussies with mortgages, it’s a sign that the era of record-low interest rates is coming to an end, warned RateCity research director Sally Tindall.
“These fixed rate hikes suggest the days of ultra-cheap funding could be numbered,” she said.
Though the Reserve Bank has insisted it isn’t expecting to hike the cash rate any earlier than 2024, many banks are anticipating it could move earlier than expected as lockdowns lift, borders reopen, and the economy “roars” back to life.
And though the “writing might be on the wall” for fixed rates, there are still options for Aussies wanting to get the best deal: there are more than 150 fixed rates on the market under 2 per cent, said Tindall.
For instance, Greater Bank has 1-year fixed rates at 1.59 per cent.
WATCH BELOW: The Big Four Banks
‘Get ready for higher interest rates’
Economists across Australia are warning that we will need to adjust to higher interest rates earlier than the RBA is expecting.
In a column for Yahoo Finance, independent economist Stephen Koukoulas said a “material pick-up in inflation” was triggering interest rate rises 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 won’t be right to hike rates until 2024; it needs to see inflation in the 2-3 per cent range.
“Our judgement is that this condition for a lift in the cash rate will not be met before 2024,” Lowe said in mid-September.
But banks are doing their own thing.
“Markets are ignoring this guidance, with the start of the interest rate hiking cycle starting to be priced in the later part of 2022, just 12 months from now, and around two years before the RBA reckons it will need to move,” Koukoulas wrote.
Commonwealth Bank head of Australian economics Gareth Aird believes the RBA will start lifting rates earlier than it’s indicating currently.
“Our central scenario sees the RBA commence normalising the cash rate in May 2023. Global inflation outcomes suggest the risks are firmly tilted towards an earlier lift off in the cash rate.”