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Aussies turn their backs on fixed rates as Westpac hikes for the 3rd time this year

Aussies turn their backs on fixed rates as Westpac hikes for the 3rd time this year

Westpac has today raised fixed rates for the third time this year by up to 0.30 per cent for owner-occupiers.

Its big bank competitors, CBA and ANZ, have already hiked fixed rates twice this year, with more rate rises expected as wholesale funding costs increase.

Westpac fixed rate changes for owner-occupiers

Rate typeOld rateNew rateChangeRepayment difference $500k
1-yr fixed

2.49%

2.69%

+0.20%

$52

2-yr fixed

2.74%

2.89%

+0.15%

$40

3-yr fixed

3.14%

3.44%

+0.30%

$83

4-yr fixed

3.54%

3.69%

+0.15%

$42

5-yr fixed

3.79%

3.99%

+0.20%

$57

Source: RateCity.com.au.Note: above rates are for owner-occupiers paying principal and interest on a package rate. Monthly repayments are on a $500K loan over 30 years.

Fixed loans no longer as popular as banks rapidly raise rates

New data from the ABS released yesterday, shows the popularity of fixed loans is waning.

At the peak in July last year, 46 per cent of the value of new loans were fixed, but that has dropped to 34 per cent in January, in original terms.

22.03.02 fixed v variable ABS graph

Source: Australian Bureau of Statistics, Lending Indicators January 2022, released 1 March. Percentages include internal and external refinancing, in original terms.

The popularity of fixed rates has declined on the back of aggressive hikes from the banks over the last five months.

Since October last year, Westpac has hiked fixed rates 7 times, CBA 6 times and NAB and ANZ 5 times.

RateCity.com.au database analysis:

  • 11 fixed rates under 2% for owner-occupiers (10 fixed for 1-year, 1 fixed for 2-years).
  • 195 fixed rates under 2.5% for owner-occupiers.
  • Average big four bank 3-year fixed rate for owner-occupiers has risen 1.37% since October.
  • 68 variable rate loans under 2%.

RateCity.com.au research director, Sally Tindall, said: “With aggressive fixed rate hikes across the mortgage market, it’s no surprise Australians are turning their backs on fixing.”

“Since October last year, the average big four bank lowest 3-year fixed rate has risen by 1.37 per cent. That’s enough to prompt even a staunch fixer to reassess their strategy,” she said.

“Last year, Westpac had some of the lowest fixed rates in the market. Now there is daylight between the bank’s rates and the low-cost lenders.

“The average big four bank 3-year fixed rate for owner-occupiers is now 1.08 per cent higher than the current market leader.

“If you’re still planning to fix, be aware the rates on offer today may not be here tomorrow,” she said.

Lenders that have changed at least one rate this year (since 1 Jan 2022)

Rate typeLenders that have cutLenders that have hiked
1-year fixed

10

72

2-year fixed

4

81

3-year fixed

2

79

4-year fixed

1

52

5-year-fixed

2

68

Variable

31

19

Source: RateCity.com.au. Note: rates are for owner-occupiers paying principal and interest on lenders’ lowest advertised rates.

Lowest big four bank owner-occupier home loan rates

Rate typeCBAWestpacNABANZ
1-yr fixed

2.79%

2.69%

2.64%

2.69%

2-yr fixed

2.99%

2.89%

2.89%

3.09%

3-yr fixed

3.49%

3.44%

3.34%

3.59%

4-yr fixed

3.69%

3.69%

3.54%

3.99%

5-yr fixed

3.99%

3.99%

3.69%

4.19%

Variable

2.29%

2.19%

2.29%

2.19%

Source: RateCity.com.au. Note: Some loan-to-value ratio requirements apply.

Lowest rates on RateCity.com.au

Rate typeLenderAdvertised rate
1-yr fixedUnity Bank

1.84%

2-yr fixedGeelong Bank

1.99%

3-yr fixedGeelong Bank

2.39%

4-yr fixedG&C Mutual Bank

2.89%

5-yr fixedG&C Mutual Bank

2.89%

VariableReduce Home Loans

1.77%

Source: RateCity.com.au. Note rates are for owner-occupiers paying principal and interest. Some LVR requirements apply.

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This article was reviewed by Head of Public Relations Laine Gordon before it was published as part of RateCity's Fact Check process.

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