Flurry of banks increase mortgage rates ahead of May RBA decision

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on April 29, 2022 Fact Checked
Flurry of banks increase mortgage rates ahead of May RBA decision

With speculation rife that the RBA will increase the cash rate next week, banks such as HSBC, Citi and others moved ahead of the game.

Many big bank economists have moved their Reserve Bank cash rate increase forecasts ahead to May's meeting next week. 

The consensus seems to be a 15 basis point hike in May followed by a 25 basis point hike in June, however AMP Capital's chief economist Shane Oliver said the central bank should be aggressive and hike by 40 basis points next week.

Of the big four banks, recent rate increases include:

  • NAB - 1 and 22 April
  • ANZ - 1 and 14 April
  • CBA - 25 March, and 12 April
  • WBC - 7 and 14 April

However it's important to note fixed home loan rates are heavily influenced by swap rates, and not solely the RBA's cash rate target.


HSBC increases

HSBC was distinct among lenders this week in that it increased variable rates and not fixed rates. 

Key increases included:

  • Home Value 90% Promo: 20 basis point increase to 2.47% p.a. (2.48% p.a. comparison rate*)
  • Inv Home Value 90% Promo: 10 basis point increase to 2.67% p.a. (2.68% p.a. comparison rate*)

Packaged home loan rates were also increased by between 10 and 30 basis points.

Citi increases

On Friday Citi increased fixed mortgage rates across the board by 70 basis points - some are nearing advertised rates of 6.00% p.a.

Some key increases included:

  • OO Standard Fixed 3 Years 80% 350k+: Now 4.79% p.a. (3.08% p.a. comparison rate*)
  • OO Standard Fixed 5 Years 80% 350k+: Now 5.29% p.a. (3.66% p.a. comparison rate*)
  • Inv Standard Fixed 3 Years 80% 350k+: Now 5.09% p.a. (3.42% p.a. comparison rate*)
  • Inv Standard Fixed 5 Years 80% 350k+: Now 5.59% p.a. (4.00% p.a. comparison rate*)

Mortgage Plus packaged loans also received the rate increase treatment. Comparison rates are lower because the variable revert rates are currently much lower than fixed rates.

Teachers Mutual increases

Teachers Mutual and its subsidiaries such as Firefighters Mutual and Health Professionals increased fixed home loan rates.

Below are some key increases for Teachers, noting that details may be different among subsidiaries:

  • Your Way Fixed 3 Years: 40 basis point increase to 3.94% p.a. (4.24% p.a. comparison rate*)
  • Your Way Fixed 5 Years: 70 basis point increase to 5.14% p.a. (4.69% p.a. comparison rate*)

These home loans are for borrowers paying principal and interest with up to 90% LVR, or loan to value ratio.

Great Southern Bank increases

Great Southern Bank increased a range of fixed home loan rates by 50 basis points, including:

  • Fixed P&I 3 Years: Now 4.59% p.a. (4.02% p.a. comparison rate*)
  • Fixed P&I 5 Years: Now 4.79% p.a. (4.23% p.a. comparison rate*)
  • Inv Fixed P&I 3 Years: Now 4.69% p.a. (4.37% p.a. comparison rate*)
  • Inv Fixed P&I 5 Years: Now 4.89% p.a. (4.53% p.a. comparison rate*)

Other customer-owned institutions to increase this week include: BCU, Auswide Bank, Beyond Bank, Heritage Bank, and MyState Bank.

Should homeowners fear a rate rise?

The general agreement among economists is that the Reserve Bank will increase its cash rate target sooner rather than later.

A few weeks ago an RBA paper reiterated modelling from 2019 showing 200 basis points in increases to the cash rate could sink home prices up to 15%.

However the paper also highlighted that many homeowners on variable rates are years ahead on their mortgages.

Director of mortgage broking firm Zippy Financial Louisa Sanghera said for most homeowners, the predicted crop of rate increases aren't anything to fear.

"For some borrowers, this may well be their first-ever rate rise – but many of those same property owners have also experienced once-in-a-lifetime increases to the values of their homes or investment properties over the past year," Ms Sanghera said.

"Property buyers who purchased prior to the pandemic are also generally better off by hundreds of thousands of dollars, with investors also benefiting from strong rental price growth over the same period.

"This means that their overall net worth has put them in a far better position than if they had never purchased because of an unrealistic fear of interest rate rises, which are a normal part of monetary policy."

These comments come as it was revealed the average household net worth in Australia amounted to $1.04 million.

Chad Hoy Poy, national lending manager at non-bank lender WLTH, said the rate increases won't be enough to sway variable rate holders to fixed rates.

"I believe the variable rate rises won't be high enough to justify switching to fixed rates that start with a 4," Mr Hoy Poy said.

"I expect a measured approach to increasing the cash rate over the coming 12 to 18 months."


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Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison strives to deliver and edit news and guides that are engaging, thought-provoking, and simple to read.

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