The Commonwealth Bank and ANZ yesterday announced they are to increase variable home loan rates by .15% and .16% respectively. The news broke only a week after Westpac raised its rates by 14 basis points, and only days after the RBA held the official cash rate for another month.
The latest increase means NAB is the last major standing.
The CBA and ANZ hikes come as no surprise to Mozo director Kirsty Lamont. According to her, after Westpac opened the floodgates, “The big banks have been noticeably more strategic about the timing of their hikes this time around.”
“It’s only a matter of time until NAB joins the fray,” she added.
Based on the comparison site’s calculations, the banks’ decision will raise the cost of a typical metropolitan home loan by $79 per month. Over the coming years, it estimates the Commonwealth Bank will profit $568m in extra interest charges, while ANZ will bring in $373m.
According to Lamont, now the spring property season is in full swing, “mortgage interest rate hikes by some of the nation’s biggest lenders are likely to have a flow on effect on the property market.”
“These rate hikes couldn’t come at a worse time for property prices. Sizeable price drops have already been recorded across some of Australia’s capital cities and as the cost of borrowing rises, prices are likely to fall even further,” she added.
However, according to RateCity research director Sally Tindall, borrowers still have a choice; while the big banks might move like a flock of sheep, it doesn’t mean their customers should do too.
“If a borrower lives in their own home and owns at least 20% of it, they should start shopping around – you’ll be surprised by the rates on offer,” she advised.
“Plenty of lenders are ready and waiting to take on the business with rates as low as 3.44 %.”
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