Major banks hike rates ahead of crucial RBA cash rate decision
Australia’s major banks are moving ahead of an expected interest rate increase by the Reserve Bank of Australia (RBA), with lenders already raising some home loan rates.
All four major banks expect the RBA to lift the cash rate by 0.25 percentage points to 4.60 per cent at its September meeting.
ANZ is also forecasting another increase in November, which would take the cash rate to 4.85 per cent its highest level since late 2008.
Commonwealth Bank recently increased some fixed mortgage rates, including a significant rise on its two-year fixed loan. Westpac, NAB and ANZ also lifted selected fixed rates by up to 0.20 percentage points.
Canstar Data Insights Director Sally Tindall said the rapid changes in fixed rates suggested banks were preparing for higher funding costs.
She noted that 18 lenders had changed fixed rates ahead of this month’s RBA meeting. While this is fewer than the 60 lenders that moved rates before the May rate increase, the latest changes have happened much more quickly.
ING has taken a different approach, making targeted changes to its variable rates for new customers. Some owner-occupier loans increased by 0.05 percentage points, while others fell by the same amount.
Tindall said the move was unusual at a time when several lenders were cutting rates to attract new borrowers as the property market slows.
The major banks have all now moved to forecasts for a September rate rise. CBA brought forward its expected increase, citing higher oil prices, the Middle East conflict and recent comments from RBA officials.
ANZ is currently the only major bank expecting two rate increases this year.
RBA Governor Michele Bullock has also indicated that the labour market remains a source of inflation pressure. She said a cash rate between 4.5 and 5 per cent could reduce pressure in the jobs market and help bring inflation down.
Australia’s latest unemployment figures will provide another important indicator before the RBA’s next decision. The unemployment rate is currently 4.5 per cent.
With borrowing costs potentially heading higher, borrowers are being encouraged to contact their lenders and ask for a home loan rate review.
Even a small reduction in an interest rate could help reduce monthly mortgage repayments if the RBA raises rates again.
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Source : News.com
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