Over the last two weeks several bank and non-bank lenders have announced increases to their fixed interest rates on owner-occupier and investment loans.
These announcements come ahead of any movement by the Reserve Bank of Australia cash rate which remains at its historic low of 1.5%.
Westpac has announced that it will be increasing their fixed rates on owner occupier loans as follows:
Owner Occupier Fixed Rates:
- 1 year - 4.59% p.a. (comparision rate 5.39%)
- 2 years - 4.19% p.a. (comparison rate 5.25%)
- 3 years - 4.29% p.a. (comparison rate 5.18%)
- 4 years - 4.79% p.a. (comparison rate 5.28%)
- 5 years - 4.59% p.a. (comparison rate 5.16%)
The largest increase Westpac has implemented is an increase of 0.6% on their five-year fixed rate for owner occupiers to 4.59% p.a. (comparison rate 5.16%).
Please note that those who already have a fixed rate home loan with Westpac will be unaffected.
Westpac’s changes come into effect today and will apply to their subsidiary St George. Separate increases will apply to another Westpac subsidiary, RAMS.
Firstmac announced increases to their 1-3 years fixed rates on owner-occupier and investor loans by up to 13 basis points. Their updated fixed rates are now as below.
Owner Occupier Fixed Rates
- 1 year - 4.09% p.a.
- 2 years - 4.09% p.a.
- 3 years - 4.09% p.a.
Investor Fixed Rates
- 1 year - 4.34% p.a.
- 2 years - 4.34% p.a.
- 3 years - 4.34% p.a.
A spokesperson for Firstmac explained the following in relation to the fixed rate changes:
“The increase was prompted by increased swap rates which have affected our funding costs…”
Other factors thought to be contributors to the recent rate increases are:
- A long-term outlook on interest rates;
- Risk; and,
- Regulatory settings.
ARE YOU AFFECTED?
Recent data released from Canstar reveals that in recent weeks 14 lenders have increased fixed rate loan offers across dozens of products by an average of 0.18%.
Among those lenders who have announced that they will be making changes are ING Direct, Suncorp, ME Bank, Bank of Queensland, Bank of Sydney and RAMS.
To find out whether you have been affected by the recent interest rate changes contact your broker direct, send us an email or contact iconic’s head offices on 1300 663 943.
WHAT TO EXPECT IN 2017
HSBC Chief Economist, Paul Bloxham, has provided some insight in to the recent changes to interest rates in Australia. He says that money markets believe the era of low rates is coming to an end and are predicting rate increases in the future which in turn puts pressure on fixed rates offered by bank and non-bank lenders. Mr Bloxham also offered his opinion, stating that whilst it does look like we are at the bottom of the rate cycle he does not forecast any movement to the cash rate in 2017.
NAB economist, Tapas Strickland, has indicated that he expects the RBA cash rate to remain on hold until later in 2017 and Macquarie’s economists have expressed their prediction that the RBA will need to cut rates twice next year in February and in May.
TO FIX OR NOT TO FIX?
When choosing a loan, you’re likely to have the option of choosing a variable, fixed or split rate loan.
- A fixed rate loan allows you to lock in an interest rate, typically for 1 to 5 years;
- A variable rate loan means that your interest rate goes up and down in response to changes in the cash rate and other changes by your credit provider; and,
- A split rate loan lets you pay a fixed rate on a portion of your loan and a variable rate on the rest..
There are pros and cons to each of the above options, and the option most suitable for you will depend on your personal circumstances.
For more information on the different types of interest rates and the benefits associated with each, click here.
If you are currently using a variable rate loan product and would like to discuss switching to a fixed rate loan, send us an email now and one of our friendly mortgage brokers will be in contact.
Thanks for reading guys, and as always don’t hesitate to contact us should you have any questions about the recent interest rate changes and how they affect you.
iconic home loans
Australian Credit Licence No. 391507
*The information provided here is general advice only and your personal circumstances have not been taken in to account during its preparation. You should not rely on this information when making any decisions in relation to your personal finances. For the most up to date and accurate fixed rates available via each lender you should contact your broker. Information regarding rate increases was taken from the following articles: http://www.news.com.au/finance/business/banking/westpac-increases-interest-rates-on-home-loans/news-story/c57e8244835948e9701a8804da19e9cb and http://www.theaustralian.com.au/news/nation/banks-jump-the-raterise-gun-by-hiking-mortgage-rates/news-story/ab706256fed0c98389d509dce1a2c935