CBA joins other banks in nudging up fixed mortgage rates

Commonwealth Bank has lifted mortgage rates on two and four-year loans by 0.05 per cent, joining a deluge of banks to do so in recent months.

The move by the CBA takes the bank’s lowest fixed rate for owner-occupiers with principal and interest loans to 1.99 per cent. Picture: NCA NewsWire/Bianca De Marchi

Commonwealth Bank has lifted mortgage rates on two and four-year loans by 0.05 per cent, joining a deluge of banks to do so in recent months.

The move by the CBA takes the bank’s lowest fixed rate for owner-occupiers with principal and interest loans to 1.99 per cent.

The bank’s four-year rates now stand at 2.29 per cent.

This is despite no change to the Reserve Bank’s official cash rate of 0.1 per cent and no indication the bank is looking to raise rates any time soon.

A CBA spokesman said the bank had made the move as part of a “regular review” of products.

“Our competitive home loan rates remain at historic lows and continue to provide value for customers in addition to our industry leading features,” he said.

“These changes reflect increasing funding costs and the broader economic recovery, which is on track despite the current restrictions.”

The move on two-year rates by CBA joins another 28 lenders that have raised rates on the product since June.

However, 24 lenders have cut rates on two-year fixed loans in that same period, according to RateCity data.

Less movement has been seen in four-year rates – 23 lenders have hiked rates on this product. Only six lenders have cut rates on four-year loans in the last two months.

RateCity.com.au research director Sally Tindall said CBA’s small rate hikes were adding up.

“While a 0.05 per cent hike isn’t much in the scheme of things, anyone who was planning to lock in one of these rates, but hadn’t, could be kicking themselves today,” she said.

“CBA is factoring in a rise in the cost of funding over the next couple of years, particularly now the RBA’s term funding facility has closed.”

The move also targets the most popular rate package being picked up by borrowers, with about half CBA’s borrowers taking up two-year fixed rate products.

“Despite today’s hikes, CBA’s still got one rate under 2 per cent and it’s not going to let go of that easily,” Ms Tindall said.

“CBA’s two-year rate was extremely competitive and attracting significant interest. By keeping it just under 2 per cent, the bank is trying to keep momentum going at a more sustainable price.

Westpac offers the cheapest two and four-year fixed-rate products of the big four banks.

However, RateCity noted 65 lenders were still offering at least one rate at under 2 per cent.

Originally published as CBA joins other banks in nudging up fixed mortgage rates