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Westpac first big four bank to hike fixed rates in 2022

Westpac first big four bank to hike fixed rates in 2022

Australia’s second largest bank, Westpac, has today hiked fixed rates for the first time in 2022 by up to 0.20 per cent.

The hikes were for owner-occupiers and investors and include its subsidiaries St George, Bank of Melbourne and BankSA.

Westpac fixed rate hikes for owner-occupiers

Fixed termOld rateNew rateChangeIncrease in repayments
1-yr fixed

2.34%

2.39%

+0.05%

$13

2-yr fixed

2.49%

2.59%

+0.10%

$26

3-yr fixed

2.89%

3.04%

+0.15%

$40

4-yr fixed

3.19%

3.34%

+0.15%

$41

5-yr-fixed

3.39%

3.59%

+0.20%

$56

Source: RateCity.com.au Note: Rates are for owner-occupiers paying principal and interest on a package rate. Monthly repayments assume a $500K, 30-year loan paying principal and interest.

The move comes on the back of a spike in the cost of fixed rate funding and an expectation the US Federal Reserve will lift rates faster and more aggressively than previously anticipated.

Lenders that have moved at least one rate since Jan 1, 2022

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

1

15

2-yr fixed

1

15

3-yr fixed

0

17

4-yr fixed

0

12

5-yr-fixed

0

16

Variable

6

2

Source: RateCity.com.au. Date range is 1 Jan to 21 Jan 2022. Note some lenders have moved more than one rate.

RateCity.com.au database analysis shows a total of 17 lenders have hiked fixed rates so far this year, but that number will rise and quickly.

There are now significantly more variable rates under 2 per cent than fixed, with 72 variable rates under 2 per cent and just 40 fixed.

Research director, Sally Tindall, said: “Westpac is the first big four bank to hike fixed rates in 2022 but certainly won’t be the last.”

“The cost of fixed-term funding is rising with inflation in the US hitting its fastest pace in nearly four decades,” she said.

“We expect other banks to follow within days on the back of sharp increases to the cost of wholesale funding.

“Mortgage holders who were fortunate enough to lock in a record-low fixed rate over the last couple of years are immune to these hikes, but only for the duration of their fixed rate term.

“Anyone who fixed at the start of the pandemic for two years should start thinking about what their next step might be. When they come off their fixed rate, they’ll be looking at a very different market.

“There are now just 40 fixed rates under 2 percent and the list is shrinking by the week. Some mortgage holders might decide to switch back to a variable rate as there are more sub-2 per cent options available,” she said.

22.01.21 big four average fixed rates.JPG

Lowest big four bank owner-occupier home loan rates

Rate typeCBAWestpacNAB ANZ
1 yr fixed

2.54%

2.39%

2.54%

2.39%

2 yr fixed

2.69%

2.59%

2.69%

2.59%

3 yr fixed

3.14%

3.04%

3.14%

2.99%

4 yr fixed

3.34%

3.34%

3.34%

3.39%

5 yr fixed

3.59%

3.59%

3.59%

3.59%

Variable

2.29%

2.19%

2.29%

2.19%

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

Lowest owner-occupier rates on RateCity.com.au

Rate typeLenderAdvertised rate
1yr fixedRACQ, UBank

1.79%

2yr fixedHSBC

1.88%

3yr fixedAustralian Mutual Bank

1.98%

4yr fixedBankVic

2.49%

5yr fixedBankVic

2.59%

VariableReduce Home Loans

1.77%

Source: RateCity.com.au. Note Rates are for owner-occupiers paying principal and interest, LVR requirements apply for some loans

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This article was reviewed by Janet Lee before it was published as part of RateCity's Fact Check process.

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