National Australia Bank has hiked its fixed interest mortgage rates for the second time in December on Wednesday, this time by up to 0.1 per cent and comes on top of an increase of 0.5 per cent on December 2.
The move is the latest in a slew of rate hikes from the Big Four banks to close out 2021, as inflationary pressures lead to growing expectations for a hike in the official cash rate from the Reserve Bank of Australia next year.
But financial comparison site Canstar said the spectre of rising rates has not deterred home buyers, with the October ABS Lending Indicators data showing the average owner-occupier mortgage size increased by 16 per cent, or $74,054 in the past year to reach $524,257.
The average loan size for first home buyers was up by 13 per cent or $53,677 to $459,201 in October, while investor loans also grew by 13 per cent, or $63,819, to an average loan size of $530,312, according to Canstar.
Of the major banks, Westpac has the lowest one-year fixed rate at 2.34 per cent (based on a 70 per cent loan to value ratio) while ANZ's one-year rate is 2.39 per cent. Five-year rates are as high as 3.59 per cent at ANZ, Commonwealth Bank of Australia and NAB, while all three have variable rates of 2.29 per cent. Westpac's variable rate is now the lowest at 2.19 per cent.
"The lowest home loan interest rates from the big banks in the first half of this year were fixed rates. Just days away from Christmas and we are a far cry from this, with the big banks and other lenders having made multiple fixed interest rate increases in recent months," Canstar's group executive for financial services Steve Mickenbecker said.
NAB's executive for home ownership Andy Kerr said the move on fixed rates reflected increasing long-term funding costs.
"NAB's decision to move fixed interest rates follows an increase in funding costs for longer dated loans. These changes do not impact the rates of our existing customers," Mr Kerr said.
Mr Mickenbecker warned variable rates are likely to be hiked as banks face more pressure on their own funding costs.
"The big banks are now offering their lowest rates on variable rate loans, secure in the knowledge that they can increase the rate to borrowers whenever their funding for home loans becomes more costly," he said.
This story originally appeared in the Australian Financial Review. Read the original story here.
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