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CBA lifts fixed home loans 0.2 per cent

The Commonwealth Bank has increased interest rates on its fixed home loans by as much as 0.2 per cent.

This is the fourth time since November CBA has lifted fixed home loan rates for both investors and owner-occupiers, with experts now saying fixed rates loans under 2 per cent will soon be extinct.

ING, Australia’s seventh largest bank, also hiked fixed and variable rates yesterday for new customers. While Westpac lifted its fixed rates in late January.

Fixed rates have been rising across the board as speculation continues to grow that the Reserve Bank of Australia will begin raising the official cash rate earlier than predicted.

Speaking at the National Press Club in Sydney, RBA Governor Phillip Lowe said there was a chance interest rates will rise in 2022 with the improved economic outlook and rising inflation.

“It’s certainly a plausible scenario that rates go up later this year, but there are a lot of scenarios as well,” Dr Lowe said.

RateCity.com.au Research Director, Sally Tindall said the CBA rate rise was unlikely to be the last.

“These hikes come as the cost of fixed rate funding continues to rise, putting the bank’s profit margin under increasing strain,” Ms Tindall said.

“While much of the heavy lifting has already been done, we expect fixed rates will keep on rising in the months to come, not just from the big four banks but across the market.”

Source: RateCity

According to RateCity.com.au CBA’s four-year fixed rate has risen 1.55 percentage points in the past 12 months.

This means someone taking out a $500,000, four-year fixed loan today will pay $411 more than someone taking out the same loan a year ago.

Ms Tindall said there were still options for borrowers looking at fixed-rate loan products, however, the market is changing rapidly.

“Borrowers still wanting to fix should consider a rate lock fee to avoid potentially getting lumped with a higher rate,” she said.

“Right now, there are just 28 fixed rates under 2 per cent but the number is dropping rapidly. In a few months’ time they could be extinct.”

Source: RateCity

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.