Major banks shake up fixed rates

Two of Australia’s major banks have shaken up their fixed home loan rates just four days before the Reserve Bank is expected to hike the cash rate again.

Commonwealth Bank has cut its three-year fixed rates for owner-occupiers and investors, while increasing its one and four-year rates.

In a surprising move, CBA cut its owner-occupier interest-only three-year rate by 1.05% and its investor principal and interest rate by 1.00%. This means the bank is now offering owner-occupiers paying interest-only a lower three-year fixed rate than owner-occupiers who are paying off their debt.

Read more: OCR set for another double hike

CBA fixed rate changes for owner-occupiers

CBA 3-year fixed rate options

_{Source: Ratecity.com.au}

ANZ has also increased its one-year fixed rate for owner-occupiers and investors, hiking by 0.50%, however the bank has left its other fixed rates unchanged.

Read more: Banks rake in huge profits as Aussies battle with interest rate hikes

ANZ fixed rate change for owner-occupiers

_{Source: Ratecity.com.au}

As the cash rate keeps climbing, the gap between variable and fixed rates continues to close. Currently, most banks’ lowest rates are still variable even after five consecutive RBA cash rate increases.

• 3.74% is the lowest variable rate (from lenders which have announced September RBA changes).
• 3.99% is the lowest 1-year fixed rate
• 4.89% is the lowest 2-year fixed rate
• 4.69% is the lowest 3-year fixed rate

The big four cash rate forecasts are: 

• CBA: +0.25% in October, peaking at 2.85% in November. Two 0.25% cuts in August and November 2023.
• Westpac: +0.50% in October, peaking at 3.60% in February 2023. Four 0.25% cuts in 2024.
• NAB: +0.50% in October, peaking at 3.10% in November.
• ANZ: +0.50% in October, peaking at 3.35% in December. Two 0.25% cuts in 2024.

RateCity.com.au research director Sally Tindall said CBA had dished up a mixed bag of fixed rate changes today.

“The bank has hiked its four-year fixed rate special but made a super-sized cuts to its owner-occupier interest-only three-year rate,” Tindall said.

“As a result, the bank is now offering a lower three-year fixed rate to owner-occupiers who don’t pay down their debt. It’s an odd message to send at a time when it’s critically important for owner-occupiers to keep paying down off their loan, if they can afford to do so.”

Tindall said fixed rates had been bouncing up and down like a yo-yo over the last few months as the markets tried to guess and second guess how the next couple of years would play out.

“While a handful of fixed rates might be on the way down, there’s still daylight between the big four banks’ lowest variable and fixed rates. The gap between CBA’s two-year fixed rate and its lowest variable is 1.60% which is more than six standard RBA hikes between the two rates,” she said.