Banks announce increases to fixed rates on home loans
Tuesday April 21, 2009
The majority of Australia's big banks have announced that they will be increasing interest rates on fixed-rate home loans. The banks announcements are thought to be a result of increases in the primary source of funding for loans, wholesale rates, which have risen since early March.
The banks have now changed their fixed rates as follows:
- Commonwealth Bank - increased rates by 0.45 percentage points for loans ranging from two to 15 years
- Westpac - increased fixed rates by up to 0.4 percentage points
- National Australia Bank also increased but unknown by how much at time of publication
- ANZ Banking Group - has remained steady, although its rates were the highest before any announcements
The full effect of these fixed rate increases is expected to cause break fees to climb well into the thousands of dollars for those borrowers wanting to switch from their fixed rate loans to a variable rate. However borrowers with existing fixed or variable loans should not be impacted by this latest announcement from the banks.
Those with fixed rates loans already would not be pleased, however, as variable rates have declined by over 4 percent since September 2008 with the Reserve Bank of Australia taking another 0.25 percentage point off just last week. As a result of these major interest rates cuts, the number of consumers looking to take advantage of these low variable rates has risen dramatically with fixed rates now becoming the more expensive option for many.
In fact, the Australian Bureau of Statistics has data concluding that of all new mortgages, the number of those that were fixed-rate loans declined to 2.7 per cent in February.
This is latest round of bad news from the banks after last week none of the banks passed on the Reserve Bank of Australia's 0.25 percentage point cut on to variable rate home loans. This is despite the fact that banks have been receiving taxpayer-backed guarantee on deposits from the Federal Government in addition to plans to promote corporate lending.
For more detail on fixed rates and variable rates and how recent changes can affect you, see our Loans page
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