Hopes for rate cuts dashed as eight banks move to lift loans

ANALYSIS

Borrowers hoping for another rate cut in the near future may as well give up hope, because the nation’s banks have signalled they know the future for the cash rate, and it’s not good news.

Banks have taken matters into their own hands recently, with a number of lenders hiking their interest rates on some loan products in advance of the RBA’s last cash rate decision for the year.

All up, eight banks have upped the interest on at least one owner-occupier fixed home loan product over the past week, while one bank has actually cut its interest rates on variable home loans for new customers.

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When banks hike their fixed rates, it means they know the cutting cycle is at an end, or very close to, and they therefore don’t need to offer discounted rates to entice borrowers to lock in at a higher level than what variable rates are likely to drop to.

The banks to hike fixed rates according to Canstar monitoring were Macquarie Bank, Greater Bank, Newcastle Permanent, Bankwest, Pacific Mortgage Group, Police Bank, Queensland Country Bank and Suncorp.

The new average short term fixed rate on Canstar’s books for owner-occupiers is 5.10 per cent.

The lowest rate is Australian Mutual Bank’s 4.74 per cent for two-year and three-year terms, followed by 4.84 per cent from Pacific Mortgage Group, which is the lowest for one-year terms only.

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It’s not just the big four banks that move independently of the RBA decisions.

For those wanting to fix longer term, 5.24 per cent is the best for four years and is offered by Firefighters Mutual, Health Professionals Bank, Teachers Mutual Bank, UniBank and Freedom Lend.

Australian Mutual Bank also had the best five year fixed rate at 5.19 per cent.

In this environment, banks can begin to offer discounts on their variable rate products, to get customers in before rates are eventually hiked.

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P & N Bank was the one lender to cut its variable rates for select owner-occupier customers.

The average variable rate is now 5.51 per cent.

Geelong Bank currently has the lowest variable rate at 4.99 per cent, followed by in1Bank at 5.08 per cent.

Pacific Mortgage Group, People’s Choice, RACQ Bank, Heritage Bank, Mortgage House, Australian Mutual Bank and Freedom Lend are at 5.14 per cent, while Bank of China is offering 5.18 per cent.

At 5.19 per cent are unloan, Qudos Bank, The Mutual Bank, Greater Bank, Northern Inland Credit Union, The Capricornian, Queensland Country Bank, Virgin money and NRMA Insurance.

It goes to show that banks are their own beasts and the RBA decisions aren’t always the be all and end all of what happens with the market. Borrowers need to take control of their own destiny and be dialled in to what banks are doing on the sidelines.

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RBA cuts are likely a thing of the past, at least in the immediate future. Picture: Nikki Short

Mortgage Choice CEO Anthony Waldron says borrowers should look at the factors they can control.

“You can’t change the cash rate, but you do have control over your home loan,” Mr Waldron said. “After three rate cuts this year, now is the perfect time to review how competitive your home loan is. If you haven’t checked your rate against the market in the last year, you are likely on a higher rate than you could be, so it’s a great time to chat to your mortgage broker.”

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