Westpac is increasing its interest rate by 60pts whilst ING and Ubank are increasing by 10pts
Record low interest rates are about to end?
Do you think most lenders will follow?
As a side note: I'd be mega angry if I was a Westpac customer
http://www.news.com.au/finance/business/banking/westpac-incr…
Raising interest rates? For savings or for home loans? What's the benefit/reasoning on raising interest rates?
To avoid speculation on real-estate which is driving the price up, which prevent first home buyers from buying.
Or they could have removed the negative gearing and/or put a tax on the benefit (if you spend 6 months in the property, you don't pay any tax for the next 5 years when you re-sell it).
Negative gearing is kind of a double edged sword. Yes it allows you to deduct the expenses for the financial year against your gross income. Although with lower than historic averages interest rates it did make more investment properties positively geared. This in turn would of been more tax revenue for the Gov. Depending on what investors did, they could of gone out on a shopping spree and used the new equity to buy more IP/Units.
Either way, lovely couple down the road here purchased a new 600,000 owner occupied house with both of them hardly speaking any English. Congrats on them, and everyone who took advantage of the lower interest rates to buy a new place.
Hope it works out for them.
Don't worry. You will be angry regardless. Lender doesn't act alone. Soon it will be the bank you bank with to raise rate :P
Having said that it's the 5 years fixed rate that are being raised (apart from ubank). Personally I have not known anyone of my client who had 5 years fixed :-/
I locked in with NAB at 4.59% for 4 years. I work on a casual basis, so having a fixed interest rate was a decision at the time based on my income and expected work.
When rates lowered, they got much better than that.
LOL
Angry at Westpac?
Where have you been all your life.
Banks aren't interested in you, never have been, never will…
But maybe you know something that getting angry at banks will change the world or the interest rate..
I'm angry that taxpayers pay the RBA governor $600k a year to do exactly what the banking and market boys tell him to do.
RBA governor $600k a year to do exactly what the banking and market boys tell him to do.
The rba operate independently of the government and others entities like financial institutions. If you have evidence that the banks are controlling the mr Lowe, then you should consider contacting the media or the appropriate government authorities.
The literality is strong in this one. Do you honestly think the governor will be acting independently and lowering interest rates in an environment where banks are raising theirs? Watch him play belated catchup. Again.
You're accusing a high ranking official of colluding with entities outside of the rba to manipulate financial markets. That is serious.
Do you honestly think the governor will be acting independently and lowering interest rates
The governor doesn't set the interest rates. The rba board does, and yes the rba board is operating independently.
@whooah1979:
I'll leave you to argue with/correct your straw man (three's a crowd) and note your prediction of the RBA not following the banks. You might want to study bond markets before your show and tell act about visiting the royal mint.
@whooah1979:
You are completely off your socks if you think appeasing market expectations and placating the market doesn't occur.
He has been making a profit on their foreign currency reserves which the government has been stealing off them cause they can't manage an economy
please ecplain.
Ok. Robbing Peter to pay Paul or in the case robbing Glenn to pay Malcolm
the world of rba has changed scince Mr. Costello. At that time from memory which is not always good - Aussie gold reserve were sold off for-currency and And Australia Fund.
All goverment earnings really belong in consolidated revenue.
further these funds should be used for public good that is not just a balance sheet item but a real good that our elders understood.
Ok. Robbing Peter to pay Paul or in the case robbing Glenn to pay Malcolm
No mention of robbing either.
The RBA paid a dividend to its shareholder the Commonwealth of Australia.
Any mention of stealing or robbing is nonsense. When Westpac pays a dividend from its profits to shareholders, is that robbing?
Will CBA be raising the interest rate on their 2-year fixed loans?
If your loan is fixed….. How can they raise the rate? You can't lower it when interest rates drop.
Can they really do that?
That's only if the loan has started. I've got an "agreed" fixed rate but don't settle til 2 months later.
Now I'm not sure if I should pay CBA's exorbitant fee of $750 to lock in the rate….
Been there, no easy answer but now seems like a fair time to buy "insurance" if you have lined up a fixed rate. Just fixed two years though..
What rate did you agree? How long for?
No one can answer that for you but CBA. Let's hope they don't increase their rate until your loan settles.
Guess I'll just have to monitor the news every day
There is a 3rd side to this story. When deposit rates go up, the RBA stops raping savers by giving it away to the gamblers.
maybe they will raise interest rates even higher so that those with savings will actually get ahead of inflation.
it/this has,is an interesting discussion.
I would wish interest rates were as simple as we would like.
Again, we must look at fundermentals and history both in living memory and factual. Here are some points.
In the past RBA and the goverment did fix interest rates.
GFC was in part caused by many US borrowers switching from a 'lifetime set' interest rate to variable interest rate we have.
We, the Aussi ecomony is market driven with large penalties, if provern, for fraud - market management - the big C and so on.
With the world ecomony being TRumped and maybe a rise in demand for loans interest rates will rise.
The fixed-rate fixed rates are a good indicator of what the lenders expect the cost of money which includes a profit share will have to pay over that period of time and end of term.
History have shown Aussie houseing loans were floating to 17% with fixed around 12%。good time for all. often banks make more money on margins when rates are low than when high.
there is ,and was a special act of goverment to seperate the RBA and banks and control of monetary policy. Depending on ones view of goverment policy one has this may be a good thing.
saw the little sub note in gingermeg comic yesterday
;- if it ain't broken don't fix it unless your a consultant
I am also concerned the Americian Way is often the way of consultants.
FYI, not all Westpac rates will increase by 60bps.
Only the 5yr fixed rate offer will have this increase.
Variable rates remain unchanged at this stage.
Thanks for fact-checking. Need more of this in this day and age
In fact, the margin for banks stays the same whatever the reference rate. So the mortgage rates should move pretty much as the RBA reference rate.
Except that Australian banks (apparently) needs to raise fund on the international market, which usually drives the rate up.
RBA usually looks at the inflation and the unemployment rate. If the inflation is high, they raise the reference rate to slow down the economy. If the unemployment rate is high, they lower the reference rate to stimulate investments.
Not sure the level of independence of the RBA with the Australian Government.
During the past few years, RBA lowered the reference rate, which was good for government as it increases the number of jobs in the country:
Lower rate means weak FX rate (Aussie dollar is cheaper), means the goods produced in Australia are cheaper for foreigners.
In the other hand, imported goods are more expensive, which should encourage local consumption.
I get carried a bit away, as it is an interesting subject.
But the most interesting point is how do they hope to control so many variables (inflation, jobs, FX, etc.) with only one parameter?
The article is a bit confusing. Are they planning on increasing variable rates for owner occupiers outside of the cycle? They would have a massive impact on goodwill and churn away from the bank. Unless they are trying to de-lever themselves out of residential while the going is good?
Australians are heavily in debt, and have seen interest rate cuts for five straight years. A 0.1% rise from UBank is really not much at all. No one is going to experience hardship because of it. But if this is the beginning of a trend then it's really going to hurt a lot of people.
Personally, every time rates rise it will give me an added incentive to spend less and hurry up repayments. I guess that's what banks and creditors want.
God awful reporting. Typical heady mixture of scaremongering and sensationalist headlines. Topped off with some confusing statements.
My main takout of the article is that uBank is increasing the standard variable rate by 10 basis points (or 0.1%) out of the rate cycle. Basically because they want to make more money. This sucks because it impacts existing customers and you'd hope it would prompt customers to shop around and leave uBank for a better deal.
Westpac increasing their fixed loan rates is pretty much a separate story. Westpac rate rises apply to NEW customers taking out fixed rate mortgages, these are mortgages with rates that are fixed for a certain period of time. There is no impact on existing customers who have already fixed their rates, or their variable rate loan customers. Westpac see rates rising in the future and want to make sure they're maintaining their profits. This isn't a major issue, because if you're shopping for a fixed rate loan you're less likely to consider Westpac if they're priced above everyone else. It does also highlight that people, who are employed to try and predict this sort of thing, think rates will be higher in the near future.
WESTPAC, National Australia Bank online and other banks are planning to raise fixed and variable home loan rates by up to 60 basis points.
Should read: Westpac owned brands are raising their fixed rate home loans between 0.24% and 0.6%. uBank is raising its variable rate home loan rates by 0.1%
But I guess my headline would get less clicks.
Bah. Typical ozbargainer putting facts ahead of a good story. Your common sense analysis is not welcome….
;)
Typical News.com.au (and associated publications) reporting style, so awful
So the question becomes, does locking in a 5yr fixed rate loan with the current (non-Westpac) cheapest provider now make sense? The "crystal ball" has spoken and I'm sure the other banks won't take long to follow.
Fixed rates are a rip off. Had a great article about it years ago and the potential that to benifit from a fixed or locked in rate the variable interest rates have to almost double all depending on how long you have your rate locked in at a higher rate then the variable and also you should read the fine print in your locked in rate because i caught out ing that if the interest rates go higher then the fixed rate then they can adjuat you locked in rate to suite so they never loose, only the customer.
Yep cheaper just to pay the going rate, fixed rate is just for piece of mind like life insurance….
I fixed once, never again, now I have 100% offset.
variable interest rates have to almost double
That's a bit of an exaggeration!
No not really. It all depends on how long you have had the fixed rate for and what the lockin rate is compared to the variable rate.
Also the admin fees that the banks will charge come into this and then to profit in a fixed rate you have to makeup for the higher rate then admin fees and once thats made you start making money.
Westpac aye? Probably increased funding cost from too many advisers in 80K car.
Hmm, this is potential bad news for me. Just bought my first property and my loan is with Westpac. I settle on the 19th of December and the looming rising rate is making me abit nervous. Best to fix to the lowest rate I can find after I settle into the house I guess
Your locked in rate will be higher then the variable by a fair bit and it will cost your extra and i doubt the market will go up substantially in the new year to gain anything by it.
Hmm good point. The RBA are meeting once more before February so I'll have to monitor the outcome of that meeting. I think we are at the end of record low interest rates so it's a decision of whether to lock in whatever the lowest fixed rate I can find after I settle and transfer the loan over or stick with the variable for now.
Fixed rates are always higher than variable rates… the comparison rate with a fixed rate loan has been atleast 0.6-0.75 bp higher than comparion rates in a variable rate loan.
The inflation outlook indicates rates will not increase till mid 2018, although there might be some out of cycle increases by major banks to maintain profit margins.
Worth sticking to variable rates - i really dont understand why one should lock themselves into paying a higher rate from day one when a rate rise or two down theline will mean you still pay less rhanor equal to what the fixed comparison rate is.
Fixed rates are always higher than variable rates… the comparison rate with a fixed rate loan has been atleast 0.6-0.75 bp higher than comparion rates in a variable rate loan.
The inflation outlook indicates rates will not increase till mid 2018, although there might be some out of cycle increases by major banks to maintain profit margins.
Worth sticking to variable rates - i really dont understand why one should lock themselves into paying a higher rate from day one when a rate rise or two down theline will mean you still pay less than or equal to what the fixed comparison rate is.
2 year fixed rates are lower than variable rates
Which bank and what comparison rate ?
CBA 2yr fixed rate - 3.84%, Comparison rate 4.97%
I negotiated it to 3.69% (0.15% below the advertised rate)
The variable comparison rate is lesser than the fixed one… cba variable comparison rate is around 3.99 - well below your negotiated circa 4.82% on fixed term
I doubt interest rates will rise any time soon, I think sometime in the middle of next year.
But Westpac has already announced they are raising interest rates…
Sorry, I should of prefaced that with 'variable'.
I certainly hope so.