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Westpac to hike fixed mortgage rates

Eliza Bavin
·2-min read
Financial planning for home loan rate, Real estate concept
(Source: Getty)

Westpac announced it is increasing the rate on its four and five-year fixed rates by 0.30 per cent for owner-occupied loans.

The bank no longer holds the title for offering the lowest four-year fixed rate.

The four-year rate will rise to 2.19 per cent from 1.89 per cent.

This comes after Commonwealth Bank increased its four-year fixed rate last month by 0.20 per cent.

Canstar analysis shows Westpac has joined eight other lenders that have increased longer term fixed rates in April so far.

Canstar group executive Steve Mickenbecker said while the move sees Westpac let go of offering the lowest four-year fixed rate, the bank still has a number of rates as low as 1.79 per cent for shorter fixed terms.

“There are still plenty of competitive rates across the board, with Canstar listing 180 fixed and variable rates below 2 per cent,” Mickenbecker said.

“Economic recovery is fueling the expectation that interest rates will rise. Fixed rates typically move before variable rates and the longer term fixed rates lead the way for rising rates.”

Mickenbecker said many Australians feel reserved about fixing their home loan rate for longer than three years, so it’s not surprising to see more competitive rates on shorter terms, but warned it may not last.

“With the Reserve Bank’s 0.10 per cent term funding facility for lenders coming to an end around mid-year, we may see upward pressure on three year fixed rates at that time,” he said.

“The banks are awash with deposits and base savings rates as low as 0.05 per cent are accommodating continuing low home loan rates.

“Regardless of whether mortgage holders are maintaining a variable rate or looking to lock in, as long as they’re getting amongst the competitive rates on offer today they are setting themselves up for home loan success.”

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