Fixed Mortgage Rates Rise as Banks Expect RBA Hike
Ten lenders raised fixed rates by 0.33% this week. Banks now predict a cash rate increase by next Tuesday.
Key points
- Ten lenders raised 266 fixed mortgage rates by an average of 0.33% in the past week.
- Westpac, CBA, and NAB now forecast an RBA cash rate hike for next Tuesday.
- Four additional hikes would add $364 monthly to a $600,000 mortgage repayment.
Ten Australian lenders increased 266 fixed mortgage rates by an average of 0.33% last week. This sharp move reflects growing confidence that the Reserve Bank of Australia will raise the cash rate next Tuesday.
Westpac, CBA, and NAB adjusted their pricing within 24 hours of each other. Some Westpac fixed offers now exceed 7%, marking the highest levels in the current cycle. Variable rates remained largely stable during this period.
Variable rates remain stable
Two lenders cut three variable owner-occupier rates by 0.05% over the same week. The average variable rate for principal and interest payments sits at 6.61%. The lowest available rate across all loan-to-value ratios is 5.69%.
Pacific Mortgage Group offers that lowest variable rate of 5.69%. Only two rates on the Canstar database remain below the 5.75% threshold. This specific segment of the market has stayed unchanged week on week.
Banks predict further hikes
Westpac and CBA moved their forecast for the next RBA hike to next Tuesday. NAB has held this position for several weeks. ANZ predicts two additional hikes, including one in November, following recent comments on inflation risks.
Two further 0.25 percentage point increases would push the cash rate to its highest level since 2008. Governor Michele Bullock highlighted inflation risks before the House of Representatives Standing Committee on Economics. These comments directly influenced the banks' shifting forecasts.
Repayment costs increase significantly
Canstar estimates each additional hike adds roughly $91 a month to a $600,000 mortgage. Four total hikes would cost an extra $364 monthly. A $1 million loan would see an increase of $606 per month across those four adjustments.
The Australian Bureau of Statistics releases labour force data this week. This data is a key input for the RBA's next decision. Brokers advise clients to review their options as fixed rates surge ahead of the final call.
