Australian mortgage brokers are facing another round of repricing and refinance conversations after all four major banks confirmed they will pass on RBA’s latest 0.25 percentage point cash rate hike in full to variable home loan customers.
“Westpac, NAB, and ANZ were quick to follow fellow big four bank, CBA, in announcing the news no variable borrower wants to hear: that the banks will be passing on the cash rate hike, in full, to their mortgages,” Canstar’s data insights director, Sally Tindall, said.
“While many borrowers have shown significant resilience in the face of previous cash rate hikes, having to pay more on your home loan, even if you can afford the increase, is a tough pill to swallow.”
RBA Governor Michele Bullock has not ruled out further tightening, with the board reiterating it is prepared to do what it takes to return inflation to target.
On the back of the latest decision and press conference, CBA’s economists now expect another 0.25 percentage point cash rate increase in May, bringing their forecast into line with NAB’s. Westpac and ANZ are still officially in the “one and done” camp, but both acknowledge the risk is skewed towards an additional hike.
Tindall urged borrowers not to wait passively for higher repayments to arrive.
“These announcements provide some time for borrowers to get prepared before they take effect. Instead of waiting it out, it’s the perfect time to act,” the Canstar insights director said. “Take a look at what your interest rate is, take stock of what other lenders are offering and then pick up the phone to your bank and ask for something better. If they don’t play ball, then it is a sign that it might be time to take a look elsewhere.”
The changing rate environment is also prompting competitive moves.
Macquarie Bank has announced it will increase variable home loan reference rates by 0.25% p.a. from 20 February, slightly later than the majors. Macquarie is emphasising fast turnaround times and a digital application experience, with some loans approved in under 30 minutes, as it continues to grow its mortgage book faster than the major banks.
Bankwest is also lifting variable rates by 0.25% p.a. on key products such as its Complete Variable Home Loan and Simple Home Loan from 13 February.
On Wednesday, AMP Bank also revealed that it was raising its variable home loan interest rate by 0.25%, effective 9 February.
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