Canstar’s latest Weekly Rate Wrap-up shows a sharp jump in fixed home loan rates over the past week, with only a small group of lenders still offering sub‑5% fixed deals.
Two lenders raised six owner-occupier and investor variable rates by an average of 0.1%, while 14 lenders hiked 356 fixed rates by an average of 0.3%. The Mutual Bank, in contrast, cut four fixed rates by an average of 0.27%.
The average variable rate for owner-occupiers paying principal and interest is now 5.92%. The sharpest variable deal on Canstar’s database is 4.99%, available from Pacific Mortgage Group for refinancers and from Horizon Bank, G&C Mutual Bank, and Unity Bank for first-home buyers. The number of rates below 5.25% has dropped to 287, down from 405 a week earlier.
Sally Tindall (pictured), Canstar insights director, said lenders have reacted quickly to growing talk of another rate rise.
“Did someone say ‘rate hike?’ That’s certainly what lenders have heard, with 13 hiking at least one fixed rate in the space of seven days, including big four bank CBA and challenger bank Macquarie," Tindall said. "As a result, rates are marching out of the 4’s, and well into the 5’s and 6’s.
“Tracking by Canstar shows the number of lenders offering at least one fixed rate under 5% has whittled down to just 12, a dramatic plummet from the over 40 recorded in October of last year.”
Tindall said banks are increasingly stepping back from heavy competition on fixed rates but remain aggressive on variables.
“While banks are increasingly turning their backs on competition in the fixed rate space, they have, by and large, remained uber competitive when it comes to variable – with four lenders now offering one rate at 4.99%, although there are caveats on each of the loans attached to these rates,” she said.
Despite the repricing, Tindall noted that a cash rate hike is not yet locked in.
“Of course, a rate hike is not a given," the Canstar director said. "Inflation at the last read landed above the target band for the fifth consecutive month, but it’s now moving back in the right direction – a small win for the RBA. If we get another encouraging read next Wednesday in the quarterly figures, that could be enough to ward off a hike, for now.
“That said, put yourselves in the RBA shoes. The discussion around a rate hike has had time over the summer to percolate from the unexpected into acceptance, at least for some borrowers. With inflation still a long way from the target of 2.5%, it could be a matter of ‘why not’.”
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