Big Four bank ANZ has beaten the RBA to the punch, hiking its fixed home loan rates ahead of the central bank’s cash rate decision on Tuesday. All of the major banks have warned Aussie borrowers to prepare for a double dose of rate pain, with hikes expected in both March and May.
ANZ has today hiked fixed rates by up to 0.25 percentage points. The hikes mean the majority of the bank’s lowest fixed rates are above 6 per cent, with the lowest 1-year rate at 5.99 per cent.
ANZ was the last of the Big Four banks to revise its cash rate forecast, announcing yesterday it now expects a 0.25 per cent RBA rate hike on Tuesday and another in May, to take the cash rate to 4.35 per cent.
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“The clearest and most immediate impact of the Middle East conflict on Australia is higher inflation,” ANZ economists Adam Boynton and Adelaide Timbrell said.
“With inflation above target and the RBA viewing the labour market as tight, the inflation risks are likely to be more central for the board than risks around [economic] activity.”
It follows hawkish commentary from RBA deputy governor Andrew Hauser earlier this week, who warned surging oil prices and general supply chain fallout from the Iran war would mean inflation would be higher than the central bank’s previous forecasts.
A March hike on Tuesday would increase monthly repayments by $91 on a $600,000 mortgage with 25 years remaining.
If the RBA hikes again in May, across the three hikes in February, March and May, homeowners would see a total increase of $181 to their repayments.
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ANZ joins 26 lenders who have hiked at least one fixed rate in the last fortnight, Canstar found, including bankwest, ubank, Heritage Bank and RACQ.
“ANZ has jumped the gun on the RBA, lifting fixed rates just four days out from the central bank’s next decision,” Canstar data insights director Sally Tindall said.
“Fixed rates are typically the early warning signal for where rates are headed. When they start creeping up before an RBA meeting it’s a sign lenders are pricing in a hike before it materialises.”
Tindall said the door was closing on many competitive fixed-rate deals, with just four lenders still offering rates under 5.40 per cent. That’s a dramatic drop from 62 lenders at the start of the year.