CBA makes first rate move of the year, hiking across the board

Australia's biggest bank follows Westpac in shifting fixed upwards this January.

CBA makes first rate move of the year, hiking across the board


By Mike Wood

CBA has upped its fixed interest rate for the first time in 2022, adding 20 basis points to its longest-term rates. They follow Westpac, who have already made upwards moves in January, and ANZ, who cut their variable.

The four-year rate is now 3.54% and the five-year rate now stands at 3.79%. Those numbers are remarkable considering where they were a year ago: the four-year was 1.99%, a full 155 basis points lower.

The one, two and three-year rates also moved upwards, with five points added to the one, taking it to 2.59%, fifteen points added to the two-year, which now stands at 2.84% and ten points added to the three-year, which is now 3.24%.

Those moves extend the gap between the three-year and four-year rates to 30 basis points, further confirming that CBA think that a major change will occur in 2025, either on the bond market or in the cash rate.

“These hikes come as the cost of fixed rate funding continues to rise, putting the bank’s profit margin under increasing strain,” said Sally Tindall.

“While much of the heavy lifting has already been done, we expect fixed rates will keep on rising in the months to come, not just from the big four banks but across the market.

“Borrowers still wanting to fix should consider a rate lock fee to avoid potentially getting lumped with a higher rate.

“Right now, there are just 28 fixed rates under 2 per cent but the number is dropping rapidly. In a few months’ time they could be extinct.”

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