The Reserve Bank is not expected to lift interest rates until 2024, but the cost of long term money for the banks is rising, meaning longer fixed-term loans to consumers are already on the rise – with only a handful of lenders still offering the ultra-low rates reached last year.

Posted in: Insights, News

27/05/2021

Property buyers are facing rising mortgage costs with some banks raising their long-term fixed-interest rates.

And there could be more interest rate rises to come.

The tide could be turning on Adelaide’s interest rates as further hikes are expected later this year.

The Reserve Bank is not expected to lift interest rates until 2024, but the cost of long term money for the banks is rising, meaning longer fixed-term loans to consumers are already on the rise – with only a handful of lenders still offering the ultra-low rates reached last year.

Just last week, Commonwealth Bank (CBA) raised their fixed-term rates for owner occupiers but spared investors from the rate increase, for now.

CBA’s move to hike fixed interest rates is part of a broader trend of increasing fixed rates and follows recent increases by other major lenders.

In fact, recent Canstar research shows that 38% of lenders on its database have now increased at least one fixed rate in the past two months.  Generally the increases have affected four and five year fixed rate terms, however we are likely to soon see increases in three year fixed rates.

The shift shows that owner-occupiers taking out new mortgages need to be wary that their monthly repayments could rise in the future if they choose a variable interest rate loan.

Borrowers need to make sure they will be comfortable with increased repayments in future, particularly those who are already stretching themselves thin trying to keep up with rapidly rising property prices.

Locking in a fixed interest rate may be a good strategy for some borrowers, particularly those whose household budgets might be sensitive to increased costs over the short to medium term.

However, we strongly recommend seeking advice from your Mortgage Broker before making a decision.

Call Bernie Lewis Home Loans on 8300 8300 or email info@bernielewis.com.au