The lowest rate in Australia, BCU’s 1.67% one year fixed, has been hiked, signalling the end of the ultra-low interest rate era of lending. Greater Bank now have the title of the lowest rate in Australia across two categories, one-year and two-year.
When it was listed, BCU’s rate was the lowest that had ever been advertised by a major lender in Australia.
With the cash rate still low, but a new term funding period ushering in a higher price of money to lenders, the level of rates is no longer sustainable.
The new lowest rate available is still 1.69%, but the trend is moving from down to up, with longer term rates under 2% now rare.
There are still ultra-low rates out there, with 43 available for one-year, 68 for two-year and 31 for three-year terms.
However, those numbers are dropping: in May, there were 50 three-year rates at sub 2%, and 70 two-year rates below that symbolic number.
Several major banks have expressed the opinion that the RBA will raise the cash rate ahead of schedule, with CBA saying that they think it will happen before the end of 2022.
Commensurately, the major lenders have raised their rates, particularly for longer term home loans, to reflect their hunch that rates will go up sooner rather than later.