Commonwealth Bank, NAB move early on rate hike

Two of Australia’s biggest banks have moved to change their fixed home loan interest rate - days before any announcement from the RBA.

Two of Australia’s biggest banks have upped their fixed home loan interest rate amid continually climbing inflation.

Both Commonwealth Bank and NAB announced the change on Wednesday, which comes before an expected fresh cash rate hike by the RBA on Tuesday.

Commonwealth Bank said changes will apply to fixed rate loans including work in progress applications on and from Wednesday, March 1.

One-year fixed rate loans for owner occupiers have jumped by 0.4 per cent to 6.2 per cent.

The two-year is 6.39 per cent, up by 0.1 per cent and a three-year rate is up 0.20 per cent to 6.29 per cent.

NAB has changed their home loan interest rate. Picture: NCA NewsWire / Kelly Barnes

There has been no change to six and seven-year fixed rate loans.

Loans funded on and from March 1 will automatically receive the new rates alongside any approved discounts if the loan wasn’t rate locked.

All rate movements are effective immediately with no grace period.

NAB customers who owner occupy have had their rates increased by 0.20 per cent to 6.44 per cent.

It comes after Westpac’s chief economist explained the grim economic outlook behind the major bank’s prediction on rate cuts, and delivered a warning to RBA boss Philip Lowe.

The big bank published a weekly report on Monday that forecast seven interest rate cuts in 2024 and 2025 but not before rates soar to 4.1 per cent in just four months.

Westpac chief economist Bill Evans said the economy would be “stagnating” by the September quarter of this year.

Bill Evans Westpac’s chief economist has said the economy will be “stagnating” by this September. Photo: Daniel Pockett / The Australian

Inflation will be around 4 per cent by the end of the year and will fall a percentage point during 2024, according to their updated forecasts.

The major bank also now expects the unemployment rate will rise from 3.5 per cent to 5 per cent by the end of 2025.

Mr Evans said this would trigger the Reserve Bank to begin cutting rates in the March quarter of next year, but warned there was a risk they could move too late.

The rate rises would be the highest in more than a decade if Westpac’s forecast rises in March, April and May come to pass.

The bank does not envisage that inflation will reach the 2-3 per cent target until June 2025.

The recent report comes as a surprise to Westpac customers after the bank insisted the cash rate would peak at 3.85 per cent in May this year.

Since May last year, borrowers have been hit with nine consecutive rate rises.

The RBA has aggressively raised interest rates in a bid to tame runaway inflation, which reached 7.8 per cent in December.

It was a peak not seen since 1990 in Australia.

Originally published as Commonwealth Bank, NAB move early on rate hike