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CBA hikes 3-year fixed rate – will the other majors follow suit?

CBA hikes 3-year fixed rate – will the other majors follow suit?

CBA has hiked its 3-year fixed rate for owner-occupiers in a further sign that Australia may soon see the end of ultra-low fixed rates.

Australia’s largest bank has increased both its 3- and 4-year fixed rates for owner-occupiers paying principal and interest by 0.05 per cent, as well as increasing some interest-only loans by 0.10 per cent.

This follows a hike of 0.20 per cent by CBA in March to its 4-year fixed rate. CBA now only has one rate under 2 per cent – fixed for 2-years.

CBA home loan changes for owner-occupiers paying principal and interest:

Lowest ratesOld rateNew rateChange
3-year fixed

2.14%

2.19%

0.05%

4-year fixed

2.19%

2.24%

0.05%

Note: the above rates are for owner occupiers paying principal and interest on a package home loan. 

RateCity.com.au database analysis: home loan rate changes in the last month.

Lenders that cutLenders that hikedCurrent lowest rate
1-yr fixed

10

3

1.67%

2-yr fixed

12

3

1.74%

3-yr fixed

9

6

1.79%

4-yr fixed

1

20

1.95%

5-yr fixed

2

17

2.10%

Variable

17

5

1.77%

Source: RateCity.com.au. Note some lenders have hiked and cut multiple home loans rates.

RateCity.com.au research director, Sally Tindall, said CBA has become the first major lender to increase its 3-year fixed rate from the bank’s record low.

“Today’s rate hikes might be small, but they point to a fixed rate market that’s starting to rise,” she said.

“When CBA hiked its four-year rate in March, a flurry of lenders followed in its wake. We expect the same thing will happen with three-year rates in coming months.

“Banks are anticipating a rise in the cost of funding over the next few years, with the next cash rate hike expected in 2024, if not earlier, and the end of the RBA’s term funding facility in just over one month.

“The funding, which offers banks cheap money fixed for three years, has helped lenders offer record low rates to its customers. When the funding wraps up, many banks are likely to recalibrate their rates,” she said.

Lowest big four bank owner-occupier home loan rates

CBAWestpacANZNAB 
1 year fixed

2.09%

1.99%

2.04%

2.09% 

2 year fixed

1.94%

1.79%

2.04%

1.89%

3 year fixed

2.19%

1.88%

2.04%

1.98%

4 year fixed

2.24%

2.19%

2.24%

2.19%

5 year fixed

2.99%

2.49%

2.24%

2.49%

Variable

2.69%

2.19% for 2 yrs then 2.69%

2.72%

2.69%

Source: RateCity.com.au. Note: Westpac's rates are for a loan to value ratio of up to 70%. NAB variable with offset for loan sizes of $750K+.

Lowest rates on RateCity.com.au database

LenderRate
1 yr fixedBCU

1.67%

2 yr fixedHomestar Finance

1.74%

3 yr fixedCredit Union SA

1.79%

4 yr fixedBankVic

1.95%

5 yr fixedBank Australia

2.10%

VariableReduce Home Loans

1.77%

RateCity.com.au. Rates are for owner occupiers paying principal and interest. Some LVR requirements apply. 

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This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

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