The Commonwealth Bank has just announced an increase of its three-year fixed rate for owner-occupiers. If you’ve been thinking about fixing your interest rate, it could be high time to do so.
I do not typically write about specific banks and their specific products, as each will work differently for my individual clients. However, this is such a significant event that it is worth discussing, given that the Commonwealth Bank (CBA) is the nation’s biggest home lender, with a market share of about 25%.
CBA has increased both its three- and four-year fixed rates for owner-occupiers paying principal and interest by 0.05%, as well as some interest-only loans by 0.10%.
Canstar research expert Mitch Watson implores anyone who is unsure about a fixed home loan rate, to get going, “For anyone still on the fence about fixing their home loan rate, this is another example of the tide turning on interest rates”.
Interestingly, in March, ANZ senior economist Felicity Emmett said fixed-mortgage rates had already reached their lowest point, or close to it, as lenders began lifting their four-year fixed rate products.
Furthermore, Canstar research shows 38% of lenders have increased at least one fixed rate over the past two months.
Why are fixed rates moving upwards if the RBA hasn’t lifted the cash rate?
The official cash rate isn’t likely to be increased until 2024 at the earliest, says the Reserve Bank of Australia. And because that’s only within the next three years, banks are already beginning to adjust their three-to-four-year fixed rates to correct for those potential future RBA rate increases.
“The money market is already factoring in [RBA rate] rises,” explains AMP Capital chief economist Shane Oliver.
“That’s not having much of an impact on two-year rates yet. But as we go through the course of the year, the possibility of rate hikes will start to impact shorter rates as well.”
What’s your next move?
Given that CBA has made this move, it’s expected that other lenders will follow along.
And if you’ve thinking about fixing your rate, or even if you haven’t, it’s definitely worth getting in touch with us sooner rather than later as other banks may be about to change their fixed rates.
We can run you through a number of different options, including fixing your interest rate for two, three, four or five years, or just fixing a part of your mortgage (but not all of it).
If you’d like to know more about this then get in touch today.