Major lender lifts fixed rates as outlook for cash rate cuts dims
Macquarie Bank has increased its fixed home loan rates by up to 0.2 percentage points per annum, affecting both owner occupiers and investors.
The lender’s lowest fixed rate for owner occupiers has now risen above 5%, standing at 5.19% per annum (5.34% per annum comparison rate) for borrowers with a loan-to-value ratio of 70% or less, fixing for two years and making principal and interest repayments. This is a 0.2 percentage point increase on the previous rate. The one-year fixed rate for the same borrower profile is also 5.19% per annum (5.35% per annum comparison rate), up by 0.1 percentage points.
The rate changes extend to Macquarie’s five-year fixed rates and apply to offset home loan products, though offset benefits are not available during the fixed period. Interest-only fixed rates for owner occupiers – available up to 80% LVR – have also increased. Investor fixed rates, including those for offset and interest-only loans, have similarly been raised.
The move follows a similar adjustment by Westpac, which raised its fixed rates by as much as 0.35 percentage points for certain terms. The adjustments come as lenders respond to shifting expectations around the Reserve Bank of Australia’s (RBA) next moves.
“Increases to fixed rates could mean that lenders are either anticipating the next move from the RBA will be a hike, or that they expect the cash rate to remain where it is for a longer period,” said Peter Marshall, finance expert at Mozo. “Right now, the future direction of the cash rate is unclear, but we expect that more lenders will start to lift their fixed rates over coming weeks as the probability of another rate cut seems to have diminished,” he said.
Other lenders, including Queensland Country Bank, BCU Bank and P&N Bank, have also raised fixed rates following recent inflation data. Market analysts generally expect the RBA’s cash rate, currently at 3.6%, will remain unchanged until at least mid-next year.
Macquarie’s home loan portfolio has continued to grow, with balances up 13% to over $160 billion in the six months to the end of September. The bank’s share of the mortgage market reached 6.5% at the end of September, with most loans written by mortgage brokers.
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