The finder.com.au Reserve Bank Survey of 30 leading economists and experts found that 71 percent of experts predict that the increase of variable home loan interest rates out of cycle – kick-started by Westpac earlier this month – would continue across the sector.
The survey highlighted that in addition to the big four jumping on board, St George and Macquarie Bank have also increased their variable rates.
Finder.com.au’s Michelle Hutchison said some lenders have a tendency to keep their rate rises quiet, which can make it difficult for Australians to keep track of movements in the home loan market.
“It’s important for borrowers to ask the question when they are speaking to lenders or applying for a new loan to find out if they have recently made any announcements or are planning to,” Ms Hutchison said. “It’s safe to assume that more lenders will follow these banks’ leads by raising their rates too.”
“Based on a $300,000 mortgage and the current average variable owner-occupied home loan rate of 5.10 percent, a rate rise of 0.18 percentage points (the average rate rise of the six lenders who’ve announced rate rises thus far) will amount to an extra $33 per month for borrowers, or potentially $396 per year or $11,880 over 30 years.”
Ms Hutchison said the big banks have set the benchmark for what the market will do. Five out of six lenders moved on the same day as Westpac, with their new increased rates to become effective on 20 November.
“However, some smaller lenders may use this opportunity to win over new borrowers, by not following the big banks’ lead at all, or not raising their rates by as much as the market average,” she said.
“Regardless, it’s a great time to compare rates to see if you can get a better deal – a small change to your interest rate can save you thousands of dollars over the life of your loan.”