Lenders move to lift four-year fixed interest rate mortgages

While the property market has been running hot, over a dozen mortgage lenders have lifted their four-year fixed interest rates.

More than a dozen lenders have hiked fixed rates.

More than a dozen lenders have hiked their four-year fixed interest rates in the past month amid a rush by Australians to fix their loans in a hopping property market.

With the Reserve Bank of Australia standing firm on its decision to keep the official cash rate flat until at least 2024, 14 lenders have moved to lift longer-term fixed rates in recent weeks, while either dropping or holding steady shorter-term rates, according to comparison website RateCity.com.au.

It comes as the property market rockets ahead, and amid intense competition in the mortgage market as borrowers look to lock in cheap rates ahead of any RBA hikes.

“With the RBA’s term funding facility now in its final stretch and the next cash rate hike firming up for early 2024, if not before, the writing is on the wall for ultra-low four- and five-year fixed rate loans,” RateCity.com.au research director Sally Tindall said.

“The idea of paying under 2 per cent interest until 2025 is an incredibly attractive proposition for many homeowners, but that doesn’t automatically make it a good idea. Take the time to work out what type of loan suits your finances,” she cautioned.

The nation’s largest lender, CBA, was among the first to move when it hiked its four-year fixed principal and interest home loan rate for owner-occupiers by 0.20 per cent to 2.19 per cent.

At the same time it slashed its one, two and three-year fixed rates in a bid to push borrowers toward the shorter-term facilities.

Other lenders, including Bendigo Bank and Bank of Queensland, followed CBA’s lead and increased their four-year fixed rates.

Westpac now offers the lowest four-year fixed rate loan in the market, at a record low 1.89 per cent, according to RateCity.

“It’s hard to see this rate sticking around for long,” Ms Tindall said.

While 14 lenders moved to lift rates on longer-term facilities, 22 have taken a knife to two-year fixed rates, while 16 have slashed rates on their three-year fixed offerings.

While fixed rate loans are usually taken up by 10-15 per cent of new borrowers, that has jumped to close to 40 per cent in the current market, with homeowners lured by the sub-2 per cent rates on offer.

It comes as economists are looking at double-digit gains in the housing market this year, with UBS chief economist George Tharenou recently predicting a 15 per cent gain by the end of December.