{"id":31971,"date":"2021-04-28T14:12:22","date_gmt":"2021-04-28T02:12:22","guid":{"rendered":"https:\/\/propertynoise.co.nz\/au\/?p=31971"},"modified":"2021-04-28T14:12:22","modified_gmt":"2021-04-28T02:12:22","slug":"banks-start-to-move-away-from-record-low-fixed-rates","status":"publish","type":"post","link":"https:\/\/propertynoise.co.nz\/au\/banks-start-to-move-away-from-record-low-fixed-rates\/","title":{"rendered":"Banks start to move away from record-low fixed rates"},"content":{"rendered":"

PHOTO: CBA was the first Australian lender in 2021 to hike its four-year fixed rates. Photo: Shutterstock<\/strong><\/p>\n

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Record-low fixed rate loans could be on the outer, with a significant number of Australian banks<\/a> hiking rates on four-year fixed terms over the past month.<\/p>\n

Research by RateCity.com.au showed 14 lenders had increased their four-year fixed rates, following the lead of the\u00a0 Commonwealth Bank of Australia, which increased its rates for four-year fixed terms last month.<\/p>\n

RateCity research director Sally Tindall said the movement by the banks was in anticipation of a likely official cash rate increase in early 2024, if not before.<\/p>\n

\u201cSo far Australia\u2019s second largest bank, Westpac, has kept its four-year fixed loan at a record low of 1.89 per cent, but it\u2019s hard to see this rate sticking around for long,\u201d Ms Tindall said.<\/p>\n

\u201cThe idea of paying under 2 per cent interest until 2025 is an incredibly attractive proposition for many homeowners, but that doesn\u2019t automatically make it a good idea. Take the time to work out what type of loan suits your finances.<\/p>\n

\u201cFixed loans come with extra restrictions such as caps on extra repayments, typically no offset account and break fees if you want to get out early.\u201d<\/p>\n

Ms Tindall said another option would be to split a home loan so it is part fixed and part variable, which typically allows for extra repayments on the variable portion.<\/p>\n

“A split loan can help you take advantage of the record low fixed rates on offer now, but still allow you to get ahead on your repayments to lessen the blow when rates do rise,” Ms Tindall said.<\/p>\n

\u201cMoney might be cheap now but in a few years\u2019 time it\u2019s likely to be a very different story, provided the economic recovery stays on track, particularly for anyone coming off a fixed rate.\u201d<\/p>\n

Earlier this week, ANZ cut its variable package rates, making the first reduction for variable rate loans by a big four bank since September.<\/p>\n

Canstar group executive of financial services Steve Mickenbecker said the decrease was being passed on to new borrowers by way of increasing a discount applied to its standard variable rate loan, which would not be passed on to existing borrowers.<\/p>\n

\u201cANZ now offers the lowest package rate among the major banks and it would not be surprising to see others moving down the same path,\u201d Mr Mickenbecker said.<\/p>\n

\u201cANZ is seeking to grow its share of low risk business, with the gap between lending to borrowers with equity below 20 percent and those with greater equity widening from 5 to 20 basis points.\u201d<\/p>\n

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