CommBank, Westpac make more moves on interest rates

Banks continue to tweak interest rates to entice customers towards variable rate loans, with Commonwealth Bank hiking its fixed rate interest loans for the third time in six weeks and Westpac slashing rates on variable finance. 

CommBank’s changes included hikes of owner-occupier fixed rates ranging between 0.15 per cent to 0.3 per cent, while investor fixed rates were increased by up to 0.6 per cent, depending on the length of the term.

Those moves followed CommBank raising fixed rates on October 15 and November 5.

RateCity.com.au research director Sally Tindall said CommBank’s rate hikes were designed to offset funding pressures that have escalated in recent weeks.

“Customers waiting in CBA’s queue to have their loan approved who didn’t lock in their rate will be cursing themselves this morning, particularly as CBA has one of the cheapest rate lock fees available,” Ms Tindall said.

“It’s raining rate hikes and the storm is nowhere near over. The flood of fixed rate hikes is likely to keep going as the cost of fixed-term funding continues to rise.” 

RateCity research showed there were 161 fixed rate loans under 2 per cent six months ago, compared to just 87 available today. 

“NAB is the only big four bank with a rate starting with a ‘1’ – its 1-year fixed rate – however this is likely to rise in the next round of the bank’s rate hikes,” Ms Tindall said. 

“While there are still a decent range of short-term fixed rates under 2 per cent, there are now just three 3-year fixed rates under this mark and no 4- or 5- year rates starting with a ‘1’. 

“Surprisingly, Greater Bank is still offering the lowest fixed rate in our records at 1.59 per cent for up to two years, however, this record-low rate is unlikely to see the year out.” 

Westpac also hiked its fixed rates this week, while also cutting variable rates, joining 39 other lenders who have slashed variable rates in the past four weeks. 

Canstar general manager of research and insights, Mitch Watson, said competition on variable interest rates was starting to ramp up. 

“Those who held off fixing before fixed rates started rising recently may be kicking themselves now but there's still an opportunity to make the most of it by chasing lower variable rates and using the flexibility of a variable rate to get ahead on repayments,” Mr Watson said.

“The variable rate cut from Westpac follows similar variable rate movements from NAB, ANZ and 38 other lenders and points to further competition amongst lenders on variable rates.

 “Variable home loans have traditionally been Australians’ preferred loans with increased flexibility to make repayments and access offset accounts. 

“The lower an interest rate an Australian borrower can access now creates a buffer against future increases on interest rates.”