The Commonwealth Bank of Australia is lifting rates on fixed term owner occupied and investment loans by up to 65 basis points, reports Boss Money.

The rate hike comes following increases by Westpac, ING, National Australia Bank and numerous other smaller lenders, at a time of growing uncertainty in the lending market.

This was reflected last week when Australian Broker reported on the growing gap between the most expensive and the most affordable loan rates for residential property, which has now widened to nearly 240 basis points.

Lenders have been citing “increased costs of funding” as one of the main drivers of the increases and, something many are attributing to the “Trump effect”, with CBA following suit.

The changes affect customers taking out new fixed-rate loans on two, three and five year fixed rate products for owner occupier and investor home loans, and CBA is blaming a mix of international and domestic reasons that have occurred in recent months for the rises, such as rising costs on global capital markets for loan swaps, which influence long term home loan product pricing.

“In the past two months swap rates have risen significantly, which has increased the cost of providing some of our fixed rate home loan products,” Dan Huggins, executive general manager of home buying said.

In monthly repayment terms, CBA’s rate increase will mean a rise of more than $355 for a borrower with a 30-year fixed loan paying the new rate of 4.74%.

Two-year fixed rates will rise 0.15% to 3.99%, while standard five-year fixed rates will increase 0.6 % to 4.74%. Three-year fixed loans are up by 20 basis points to 4.09%.

The Reserve Bank of Australia’s recent figures show continued strong growth in investor loans, and CBA’s changes show that the major, like other banks, is also rushing to attract investors with better deals.

The bank has decreased its interest rates on four-year fixed rate products for both owner occupier and investor home loans by 20 basis points to 4.54% for the standard rate and 4.39% for the packaged loan.

If you want to look at fixing your loan, please contact Boss Money for a quick review on what your lender is offering and how that compares to the best rates in the market.

Kind Regards,
Tom Uhlich
Boss Money