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'Breakneck speed': NAB and ANZ race to hike rates

·3-min read
NAB and ANZ have increased interest rates. (Sources: Getty)
NAB and ANZ have increased interest rates. (Sources: Getty)

Australia’s biggest banks are in the midst of a rate-hike race with both ANZ and NAB increasing mortgage rates since Thursday.

ANZ revealed it would increase fixed rates by up to 0.40 per cent on Friday, marking the second ANZ rate hike in three weeks.

ANZ rate hikes

Note: Above rates are for owner-occupiers paying principal and interest on a package rate with an annual fee of $395. Monthly repayments are based on a $500K, 30-year loan over the fixed rate term.
Note: Above rates are for owner-occupiers paying principal and interest on a package rate with an annual fee of $395. Monthly repayments are based on a $500K, 30-year loan over the fixed rate term.

That means that ANZ now has no advertised rates below 2 per cent, while NAB has just its 1-year 1.99 per cent fixed rate.

And on Thursday, NAB announced it would increase its fixed rates by up to 0.51 per cent. NAB has now lifted fixed rates twice in five months.

NAB rate hikes

Note: Above rates are for owner-occupiers paying principal and interest on a package rate with an annual fee of $395. Monthly repayments are based on a $500K, 30-year loan over the fixed rate term.
Note: Above rates are for owner-occupiers paying principal and interest on a package rate with an annual fee of $395. Monthly repayments are based on a $500K, 30-year loan over the fixed rate term.

“Banks are raising fixed rates at breakneck speed, as the economy rebounds and funding costs increase,” RateCity research director Sally Tindall said.

“What started as minor adjustments by the banks has turned into a significant and sustained move north for fixed rates.”

It’s unlikely to slow, Tindall added, noting that both Westpac and Commbank have also increased rates recently, meaning all major banks have now hiked rates since October.

Lowest big four bank owner-occupier home loan rates

Source: RateCity.com.au. Note LVR requirements apply for some loans.
Source: RateCity.com.au. Note LVR requirements apply for some loans.

“The number of fixed rates under 2 per cent is dropping rapidly. While there’s still plenty of choice among short-term rates, there are now just four 3-year fixed rates under 2 per cent and no 4- or 5- year rates under this mark,” she said.

What does it mean for borrowers?

The rate-hike frenzy means that an owner-occupier taking out a $500,000 principal and interest loan with a 3-year fixed rate will pay an extra $162 per month on average, compared to someone taking out the same mortgage six months ago.

Average big four bank fixed rates then and now

Source: RateCity.com.au Note: Monthly repayments are based on a $500K, 30-year loan over the fixed rate term. 6 months ago rates are from May 12, 2021.
Source: RateCity.com.au Note: Monthly repayments are based on a $500K, 30-year loan over the fixed rate term. 6 months ago rates are from May 12, 2021.

“Customers currently in the queue for a fixed rate should consider paying a rate lock fee in this environment,” Tindall said.

“The number of fixed rates under 2 per cent is dropping rapidly. While there’s still plenty of choice among short-term rates, there are now just four 3-year fixed rates under 2 per cent and no 4- or 5- year rates under this mark [across RateCity’s database].”

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