Westpac, CBA raise owner occupier rates

Shock moves following RBA statement

Westpac, CBA raise owner occupier rates

Although rates remained steady earlier this week, the RBA’s change of forward guidance confirmed for many, that national rates were going to rise sooner than expected.

“There was no expectation that the RBA would change the cash rate,” ANZ’s head of economics David Plank told MPA in an exclusive interview on Tuesday.

“What was really important was that they shifted their timing. Before they characterised that they wanted to see inflation sustainably within the band and higher wages but they didn’t think that would happen until 2024. Now, because of better data and what has been happening globally, they’ve changed their forecast and brought it forward. We’re going to get earlier rate hikes than 2024…”

Big four bank Westpac was the first to raise rates after the RBA’s statement. This mortgage interest rate is the second time the bank has pushed up fixed mortgage rates in just over two weeks.

The mortgage rate hike applies to owner occupiers with fixed rates. The three year rate has risen by 0.21%, to 2.29%, four year rates have risen by 0.1% to 2.69%, and the five year rate has also been increased by 0.1% to 2.99%.

CBA has also pushed up rates for the second time in just over three weeks. Today, CBA has raised its 1- to 5-year fixed rates by up to 0.50% for owner-occupier and investors.

This means CBA now has no advertised home loan rates under 2% for the first time in almost a year.

Analysis of the RateCity.com.au database shows a total of 33 lenders have hiked at least one fixed rate in the last month.

Four lenders have hiked their fixed rates twice in the last month: CBA, Westpac, AMP and BDCU Alliance Bank. RateCity said it was likely this list will grow.

Interest rates coming “thick and fast”

RateCity.com.au research director, Sally Tindall, said: “the fixed rate hikes are now coming thick and fast and they’re getting bigger as we go.”

“Anyone who is in the process of fixing their rate with Australia’s largest bank, and didn’t pay a rate lock fee, will be kicking themselves this morning,” she said.

“This latest round of hikes from CBA is more than just a tweak, with increases of up to 0.50 per cent on some fixed rates.

“The mortgage market is undergoing a transformation and it’s happening faster than expected.

“The speed at which global economies are improving has seen the cost of buying funds spike, putting pressure on banks to lift fixed rates.

“Australia’s two largest banks have hiked fixed rates just days after the RBA’s shift in monetary policy. We expect big four bank rivals NAB and ANZ will follow suit in a matter of days, along with a flurry of other lenders.

“CBA has abandoned its efforts to keep at least one fixed rate under 2 percent. While a rate starting with a ‘1’ is a great marketing tool, it was clearly unsustainable for the bank.

“Despite yesterday’s hikes, Westpac still has two fixed rates under two percent, however, in this climate, it’s hard to see these rates sticking around for much longer,” she said.

Scenario: how new CBA customers may have been affected

RateCity.com.au analysis shows a customer who is currently applying for a $500,000, 3-year fixed rate with CBA, could potentially pay an extra $5,503 over the fixed-rate term if they didn’t lock in their rate.

In this scenario, the borrower would have been better off paying CBA’s rate lock fee of $375. However, this only applies if rates rise during the application process. 

Loan size

Cost of 3 yr loan (2.29%) + rate lock fee

Cost of 3 yr loan (2.69%)










Source: RateCity.com.au Notes: based on an owner-occupier paying principal and interest, taking out a 3-year fixed rate loan with CBA. The cost includes interest plus the rate lock fee in the case of the person locking in their rate. Does not include other fees. CBA's rate lock fee is currently $375.