Any doubts that the best has passed for fixed-interest rate mortgages were dispelled last week when the Commonwealth Bank raised longer-term fixed rates – a move quickly matched by Westpac.
The CBA cut the interest rate on its lowest adjustable rate mortgages by 0.4 percentage point – to 2.29 percent – but only for new customers with a deposit of at least 30 percent. It also lowered its fixed rate to 1 year.
These measures indicate that Australia’s largest banks expect their funding costs to increase over the next two years, although the Reserve Bank of Australia (RBA) has repeatedly said it does not plan to start. to increase the cash rate before 2024, at the earliest.
“These fixed rate hikes suggest that the days of super-cheap financing may be numbered,” says Sally Tindall, Research Director at RateCity.
“While the RBA insists the next rate hike won’t happen until at least 2024, banks anticipate an increase in the cost of funding once the borders reopen and the economy rebounds,” a- she declared.
Inflationary expectations have risen sharply as consumers expect to demand higher wages and businesses increase the prices of their products and services.
With the latest lockdown in NSW ending and international travel resuming from November 1, spending at cafes, restaurants, outlets and airlines is expected to increase.
With Victoria not far behind NSW in the opening, banks are likely to have to pay higher interest rates to attract savings.
Most of the rate cuts lenders have in recent months have been in their variable interest rates and fixed one-year maturities, with higher rates on their 2, 3, 4 and 5 year mortgages.