Recent decisions made by the major banks to lift their fixed-rate mortgages suggest that variable rate hikes are on the way, according to mortgage comparison site RateCity.
CBA lifted the rate of its three-year fixed rate by 20 percentage points to 4.24 per cent last Friday. The major bank also increased its five-year fixed rate by 60 basis points to 4.74 per cent. CBA was the second major in a fortnight to lift rates, following Westpac.
A RateCity analysis found that along with CBA and Westpac, a further 20 lenders have lifted their rates on 268 fixed products since 1 November. RateCity's data insights director Peter Arnold said that “it’s a sign of what’s to come”.
“Fixed rates are based on market expectations of future rates and are the best indicator that we’ve got that a variable rate hike is on the way,” he remarked.
“Previously, banks were betting on lower rates in the future but we’re seeing those expectations change by the day.
“But longer-term fixed rates, such as five years fixed, are sitting higher than variable rates and rising by the biggest margins, which tells us that they don’t expect low rates will last forever.”
Mr Arnold noted that RateCity.com.au data shows the number of people looking to fix their home loan rates increased in the past month.
“We’ve seen interest in fixing rise by nearly 30 per cent in November, compared with October, as home owners lock in now before rates rise further,” he said.