Westpac has made its fourth rate hike in just two months, shifting their three-, four- and five-year fixed prices upwards by 30 basis points. The move is replicated across their subsidiaries St George, Bank of Melbourne and BankSA.
Westpac’s one-year fixed rate was raised by just 10pts, while the two-year fixed went up 25pts, with all rates now having being upped significantly since Australia’s biggest cities exited lockdown in October.
The one-year rate was 1.99% then, but is now 35pts higher at 2.34%. The two-year, which was previously the lowest at 1.89%, has gone up 60pts to 2.49%.
The three-year fixed rate, which is now pricing in a cash rate rise at some point in 2023, has jumped a mammoth 91pts, going from below the 2% barrier at 1.98% to 2.89%. That move represents a $235 difference in monthly repayments for borrowers.
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Rises in even longer-term rates, which have seen the four-year fixed rise 70pts from 2.49% to 3.19% and five-year fixed up 60pts f rom 2.79% to 3.39%, reflect an expected rise in the cost of funds on the bond market.
It represents the next phase of the interest rate hikes that have been seen widely across the Big Four bank in the last six weeks as the market attempts to react to the Reserve Bank of Australia (RBA) decision to abandon their commitment to not raising the cash rate before 2024.
“Westpac has now hiked its fixed rates four times in just over seven weeks, with its 3-year rate for owner-occupiers rising by almost a full percentage point in that time,” said Sally Tindall of RateCity.
“Anyone considering a fixed rate with Westpac will be gobsmacked by these increases, but they’re certainly not isolated to one bank. Many people thinking about fixing their rate may now be reconsidering their plans.”
“The average borrower taking out a $500,000, 3-year fixed rate loan with Westpac today will be paying $235 more a month than someone who took out the same loan two months ago.”
“Unfortunately, we haven’t seen the end of these fixed rate hikes. We expect them to keep rolling in as we head into 2022.”