The Reserve Bank may have kept the official cash rate on hold at their September meeting for the 25th consecutive month, but the same certainly can’t be said for the major banks.
Westpac was the first of the major banks to lift their variable rates for both owner occupiers and investors (by 14 basis points) and now they have been followed by both ANZ and CommBank.
ANZ have announced that they will be lifting their variable rates for home buyers and investors by 16 basis points, taking effect from September 27, 2018.
CommBank have also said that they will be hiking their rates, by 15 basis points, from October 4, 2018.
All of the banks have cited increased funding costs as the reason behind the rate hikes.
Will we see more rate hikes?
CoreLogic research head Tim Lawless believes that the cash rate will remain on hold until at least January 2020 and that there may even be the possibility of a lower cash rate. However as we have seen the banks can and are raising their rates independently of Reserve Bank movements.
But Lawless says that the home loan market will remain competitive.
“Despite the outlook for a stable cash rate, but slightly higher mortgage rates, we can expect lenders to remain hyper competitive, particularly for high quality borrowers – those with large deposits, lower debt to income ratios and a strong credit history,” Lawless said.
“Even with mortgage rates starting to edge higher, from a historical perspective, rates remain extremely low which will continue to support housing demand. No doubt borrowers will be applying pressure on their lenders to ensure they are on the lowest rate possible.”