Borrowers start to pay more

Many Aussie banks have begun raising their rates out of cycle, and it could cost homeowners thousands in interest.

CommBank has lifted its four-year fixed term loan to 2.89%, while its three-year fixed terms are up 40 points to 2.69%. On an $800,000 mortgage, these rises could equate to as much as $10,000.

“Many [homeowners and home buyers] are aware the Reserve Bank has kept the cash rate at the same historic low and assume that there are still a lot of cheap home loans available,” says Matthew Gatt, general manager, home loans, Compare Club. “That may have been true four months ago, but the banks are already removing many of the ultra-low rates from the market. For example, Bankwest, Macquarie and CommBank have recently raised their fixedterm loans and it wouldn’t be a surprise if more lenders follow suit and remove some of the cheaper fixed term loans at the start of 2022.”

Meanwhile, the Reserve Bank has given up maintaining the yields of April 2024 bonds at 0.10% – a program designed to keep lending costs low.

“The lack of any intervention to defend the 0.10% target following higher than expected inflation numbers meant that the end of yield curve control had been largely anticipated by the market,” says Anthony Doyle, cross-asset investment specialist at Fidelity International.

The RBA also gave up on the 2024 guidance it has been giving in regards to when it will lift the cash rate.

“Caught behind the curve by more persistent inflationary pressures, a stronger than anticipated labour market and rising bond yields, the RBA indicated that it will likely join other central banks by beginning to lift the cash rate sooner than it had anticipated,” says Doyle.