Another major bank has now raised its fixed mortgage rates in a clear sign official interest rates are set to surge at the fastest pace in almost three decades.
National Australia Bank on Friday joined the Commonwealth Bank in lifting their fixed rates.
Economists with Australia’s biggest banks are widely expecting the Reserve Bank of Australia to raise the cash rate by 0.5 percentage points at its July 5 meeting.
This would take the cash rate to a three-year high of 1.35 per cent from the existing level of 0.85 per cent.
After the increases in May and June, a rate increase in July would already be the greatest pace of increases in a brief period since late 1994.
In order to combat the worst inflation in twenty years, 5.1%, the RBA is forecast to raise rates several more times in 2022.
The NAB one-year fixed rate will rise from 3.59 percent to 4.69 percent by 1.10 percentage points.
The two-year fixed mortgage rate from NAB is increasing by one percentage point to 5.59% from 4.59%.
In preparation for another significant Reserve Bank rate increase in July, The Commonwealth Bank increased its fixed mortgage rates on Thursday by a whopping 1.4 percentage points for both owner-occupiers and investors seeking maturities of one to five years.
The lowest one-year fixed rate offered by CBA is increasing from 3.59 percent to 4.99 percent.
From 5.29 percent to 6.69 percent, the five-year rate is rising.
More than 70 banks increased at least one fixed rate in the previous month, according to a RateCity research.
As of this week, no Australian lenders are providing mortgage rates below 2%.
Canstar listed 68 items with that low rate before the Reserve Bank hiked rates in May, down from 193 a year earlier.
Australians are unlikely to ever again experience mortgage rates below two percent, according to Canstar banking expert Steve Mickenbecker.
He stated, “We may never again see an era of house loan interest rates below two percent due to the Reserve Bank’s cash rate increases in May and June.
The Commonwealth Bank reduced its Extra Home Loan variable rates by 0.15 percentage points, bringing the lowest discount rate down from 2.94 to 2.79 percent, while fixed rates increased.
With fewer onerous credit card limits, the more popular CBA variable rate is also declining by 0.15 percentage points, from 3.04 percent to 2.89 percent.
At the RBA meeting on July 5, the Commonwealth Bank anticipates a 0.5 percentage point increase, which would raise the cash rate to 1.35 percent, the highest level since June 2019.
The 0.5 percentage point gain in June was the first increase of that size since February 2000.
The 0.25 percentage point hike in May marked the first increase since November 2010.
For the first time in nearly 12 years, the cash rate would increase for a third consecutive month in July if there was another rate increase.
If interest rates rise by 0.5 percentage points next month, home borrowers will have already experienced 1.25 percentage point increases from the RBA in the past three months.
The rate of growth in such a little period hasn’t been this rapid since late 1994, in the early days of the internet.