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Fixed rates rise as banks ready for RBA hikes

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  • Fixed rates rise as banks ready for RBA hikes

    Fixed rates rise as banks ready for RBA hikes


    October 26, 2009 - 12:44PM Comments 1
    Property market hits full strideProperty
    editor Marika Dobbin takes a look at the property results from the weekend.
    All of the big four banks have raised fixed rate mortgages as they anticipate more interest rate rises from the Reserve Bank in the months ahead.
    National Australia Bank today became the last of the big four banks to lift fixed interest rates - at a time when mortgage holders could be looking to lock in rates ahead of what is expected to be a series of rate rises from the central bank.
    A one-year fixed rate home loan from NAB will increase 50 basis points to 6.59 per cent, effective today, according to the latest data from rates monitoring service Canstar Cannex.

    A two-year fixed rate home loan will increase 40 basis points to 7.29 per cent. NAB's three-year fixed rate will also increase 40 basis points, rising to 7.59 per cent
    The latest fixed rates take into account "any possibility" of a rate rise for the period of the loans, Canstar Cannex's senior financial analyst, Harry Senlitonga, said.
    At the moment, financial markets expect a rate rise when the Reserve Bank meets again on Melbourne Cup Day - and analysts agree.
    There is a one in three chance of a half-percentage-point rise, markets suggest, and a 25-basis-point rise is considered a certainty.
    Increases to fixed-term loans come after the Reserve Bank increased the cash rate by 25 basis points to 3.25 per cent this month, as it moved to contain price pressures and keeping the economy on track for expansion.
    ANZ's pledge
    Over the weekend, ANZ chief executive Mike Smith pledged not to make increases to the bank's standard variable rate out of step with RBA rate moves.
    Variable rates - which change throughout the life of a loan – add to the monthly costs of Australian households as they rise.
    The big banks have come under pressure from Treasurer Wayne Swan, who has attacked banks over rate increases that go above those announced by the Reserve Bank.
    Despite that, ANZ said that, as of today, it will charge an additional 80 basis points on a one-year fixed rate, rising to 6.5 per cent from 5.7 per cent for new customers.
    ANZ's two-year fixed rate loan will rise by 65 basis points to 7.34 per cent, while the bank's five year will now costs 8.04 per cent, a rise of 30 basis points.
    "ANZ prices its fixed term loans off market rates which have been rising because of expectations that the official cash rate will rise further in the medium term," said a spokesman for the bank.
    Westpac, Commonwealth
    Late last week, Westpac added 35 basis points to its one-year fixed term mortgage, taking it to 6.54 per cent.
    The bank's two-year fixed term loans increased by 20 basis point to 7.19 per cent, while its 5 year loan increased 10 basis points, or a tenth of a per cent, to 7.94 per cent.
    A week ago, Commonwealth Bank became the first of the majors to raise fixed-term rates, with the one-year offering up 45 basis points to 6.64 per cent, and its two-year fixed-term rate rising 50 basis points to 7.34 per cent.
    The five-year fixed rate from CBA increased 25 basis points to 8.04 per cent, the bank said.
    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

  • #2
    The last chance

    If the RBA had the courage it would shock the market by dropping the cash rate to 1%.
    This would immediately drop the dollar, boost exports, and slow imports.
    Mortgage rates would hardly move as there is already a disconnect between the cash rate and mortgage rates.
    OllyN [email protected]
    Independent Property Consultant
    Residential and Commercial Solutions