Rates honeymoon over as Australian fixed-rate loan deals are lifted

THE three big banks are among dozens of lenders to lift fixed-rate loan deals by as much as 0.8 per cent within the past week.

SOME fixed-rate loans have jumped almost a full percentage point in the past week which suggests the years of record-low interest rates are over.

More than one third of the home loan market has increased its fixed rate loans by as much as 0.8 per cent in the past week and some institutions have even upped their rate deals twice within this short period.

Smaller lender Newcastle Permanent — renowned as being one of the most competitive lenders in the market — has increased it’s four and five-year fixed rates deals twice this month by as much as 0.8 per cent.

And of the big four banks ANZ is the only lender not to shift their fixed rate deals this month.

New analysis by financial comparison website RateCity found dozens of lenders have increased rates this month and many more are expected to follow suit, signalling now could be the right time for borrowers to lock in.

Home Loan Experts’ managing director Otto Dargan said for any lenders that haven’t shifted their fixed rates they are likely to do so soon.

“The market has turned and it’s likely that the lenders that haven’t put up their fixed rates are deciding what to do now,’’ he said.

“Nobody can predict the future of interest rates, next year they may be up or down so fixing is always somewhat of a gamble.”

RateCity spokesman Peter Anorld said the rising cost of funding and competitive mortgage market had helped drive up fixed-rate deals in recent weeks.

“We have now seen one third of the market move fixed rates so that’s a big chunk of lenders and we’ve seen some pretty big increases,’’ he said.

“It’s looking like it is a turning point ... I can’t imagine the rates are going to go back down by the same amount.”

Reserve Bank of Australia governor Philip Lowe kept the cash rate on hold at 1.5 per cent this month.

The average variable rate on a $300,000 30-year loan is 4.33 per cent compared to the average three-year fixed rate deal at 4.04 per cent.

Newcastle Permanent’s chief executive officer Terry Millett said a combination of their spring home loan campaign ending, increases to long-term funding costs and regulatory caps on the amount of lending to investors lead to them increase some fixed deals twice within a week.

“We monitor rates daily but if we think prices are moving very quickly we can move fairly promptly,’’ he said.

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Originally published as Rates honeymoon over as Australian fixed-rate loan deals are lifted