Before a key Reserve Bank meeting this week, Australia’s biggest banks have been pushing up their fixed rates and walking away from the ultra-competitive approach they took to attract customers to this type of mortgage during the pandemic.
NAB increased its fixed rates for owner-occupiers and investors on Friday for the second time in a week – meaning some rates rose by up to 0.5 percentage points within the space of eight days – in a sign the big banks are seeking to offset rising funding costs.
“There’s been a significant rise in the cost of funding in the last 12 months which has flowed through to both fixed and variable rates,” she said. “Rising cash rates have made the cost of funding expensive all over the world.” Competition for fixed-rate customers has eased. While in July 2021, a record Australian high – 46 per cent – of new and refinancing customers were on fixed rates, Tindall said that figure had now “fallen off a cliff” to about 5 per cent.“The consequences of having uncompetitive fixed rates aren’t huge because there’s not much competition in the sector right now,” Tindall said.
“I can’t see a fall in long-term rates any time soon because the expectation is that there’ll be a pretty soft landing which means there won’t be a strong case for early easing of interest rates,” he said.
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