RBA’s inflation warning sparks fixed rate hikes

Market uncertainty prevails as future of cash and mortgage rates remains unclear

RBA’s inflation warning sparks fixed rate hikes

The Reserve Bank of Australia’s (RBA) latest cash rate announcement has stirred uncertainties in the mortgage market, with lenders implementing a number of fixed rate increases over the past week.

Great Southern Bank increased its variable rate for loans with a loan-to-value ratio (LVR) between 70% and 80% by 0.05 points to 6.24%. HSBC and Bank Australia adjusted their one-year fixed rates upwards by 0.20 and 0.15 points respectively, positioning HSBC’s new one-year fixed rate at 5.99%.

Lenders that made rate cuts include Firefighters Mutual Bank and UniBank, which both reduced their two-year fixed rates by 0.20 points to 6.29%. Teachers Mutual Bank made a smaller adjustment, cutting its three-year fixed rate by 0.15 points to 6.24%.

Among the big four banks, variable rates now range from the Commonwealth Bank’s 6.59% to Westpac’s slightly lower 6.54%. Fixed rate offerings over one to five years also vary, with the lowest one-year fixed rate at 6.59% and the highest five-year rate at 6.84%.

Sally Tindall (pictured above), research director at RateCity.com.au, said that the RBA hinted that the cash rate might have reached its peak, yet expressed concerns about the ongoing battle against inflation, predicting that the Consumer Price Index could end the year higher than current levels and casting doubts on the possibility of cash rate reductions this year.

“Following this, we’ve seen a smattering of fixed rate hikes this week from lenders such as HSBC, Bank Australia, and Great Southern Bank,” Tindall said.

“It’s too early to call it a trend, and we’re still yet to see how the government’s new budget measures, including the $300 energy bill rebate, may impact inflation.

“It’s probably fair to say the market, along with the RBA, is not confident of what the cash rate, and mortgage rates, will do through to the end of the year.” 

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