CommBank calls for a June rate hike; Westpac raises fixed rates

Economists at CommBank are now expecting the Reserve Bank of Australia (RBA) to raise the cash rate by June this year.

CommBank head of Australian economics Gareth Aird said the forecast pointing to a June hike was based on the prediction about where the inflation is going over first quarter of 2022.

“We are very comfortable with our expectation that the Q1 22 underlying inflation data will be a lot stronger than the RBA’s forecast,” Mr Aird said.

In a recent appearance before the House of Representatives Standing Committee on Economics, RBA Governor Philip Lowe said the central bank board is still observing where wage growth and inflation would go before moving the needle for cash rate.

“We are prepared to take the time, particularly given our inflation history and the prospect of low unemployment,” Dr Lowe said.

Mr Aird said Dr Lowe’s statement seemed to hint that the RBA is willing to consider inflation to be in sustainably within the target range if the next two inflation prints are in line with their forecast.

But given CommBank’s forecast on inflation, Mr Aird said the RBA could potentially deliver a 15bps increase in cash rate in June, bringing it to 0.25%.

By the end of 2022, the cash rate is slated to by at 1%.

“Interest rate increases will generate changes in behaviour, which in turn will impact economic outcomes,” Mr Aird said.

“For context, we estimate there are over one million home borrowers who have never experienced an increase in mortgage rates.”

Another increase is seen in 2023, which would ultimately bring the cash rate to 1.25% by the third quarter.

“The RBA will need to assess the impact of rate hikes on the economy, particular the household sector and the housing market, as they move through the tightening cycle,” Mr Aird said.

“This means the central bank is likely to be patient and a gradual and shallow rate hike trajectory is our base case."

Westpac was also one of the major banks that adjusted their projections of a cash rate hike — it expects for an August rate hike, which would bring the cash rate target to 0.2%.

Ahead of these forecasts, here are some of the major movements in home loan rates among some of Australian banks and lenders:

Westpac

Westpac Loan Product	Change	New Advertised Rate	Comparison Rate
Fixed Options IO 5 yrs 70%	+40bps	4.49% p.a.	5.02% p.a.
Fixed Options P&I 4 yrs 70%	+30bps	3.84% p.a.	4.47% p.a
Premier Advantage Fixed Options P&I 4 yrs 70% 150k+	+20bps	3.54% p.a.	3.72% p.a.
Premier Advantage Investment Fixed P&I 5 yrs 70%	+20bps	3.89% p.a.	3.94% p.a.

 

Credit Union SA

Credit Union SA Loan Product	Change	New Advertised Rate	Comparison Rate
Fixed Home Loan Package P&I 3 yrs	+30bps	3.34% p.a.	3.71% p.a.
Fixed Home Loan Package P&I 5 yrs Special Offer	+35bps	3.74% p.a.	3.88% p.a.
Investment Fixed Home Loan Package P&I 4 yrs Special Offer	+41bps	3.60% p.a.	4.09% p.a.
Investment Fixed Home Loan Package P&I 5 yrs Special Offer	+35bps	3.74% p.a.	4.14% p.a.

 

Citi

Citi Loan Product	Change	New Advertised Rate	Comparison Rate
Basic Variable P&I 80% 350k+	-10bps	1.99% p.a.	2.04% p.a.
Standard Fixed P&I 1 yr 80% 350k+	+30bps	2.49% p.a.	2.46% p.a.
Standard Fixed P&I 5 yrs 80% 350k+	+30bps	3.69% p.a.	3.00% p.a.
Mortgage Plus Standard Fixed P&I 3 yrs 80% 350k+	+20bps	3.19% p.a.	2.92% p.a.

 

BankSA

BankSA Loan Product	Change	New Advertised Rate	Comparison Rate
Residential Fixed P&I 2 yrs	+15bps	2.99% p.a.	4.44% p.a.
Advantage Package Residential Fixed IO 5 yrs 150k+	+30bps	4.39% p.a.	4.46% p.a.
Advantage Package Investment Fixed P&I 4 yrs 150k+	+20bps	3.84% p.a.	4.22% p.a.
Investment Fixed P&I 5 yrs	+20bps	4.14% p.a.	4.88% p.a.

 

Suncorp Bank

Suncorp Bank Loan Product	Change	New Advertised Rate	Comparison Rate
Home Package Plus First Home Buyer Variable <95% P&I	-25bps	2.44% p.a.	2.87% p.a.
Back to Basics Better Together IO 70-80% Special Offer	-35bps	2.59% p.a.	2.24% p.a.
Back to Basics Better Together P&I 80-90% Special Offer	-25bps	2.29% p.a.	2.30% p.a.
Investment Back to Basics P&I 80-90% Special Offer	-35bps	2.64% p.a.	2.65% p.a.

 

86 400

86 400 Loan Product	Change	New Advertised Rate	Comparison Rate
Investment Own Home Loan IO 70-80%	-30bps	2.49% p.a.	2.65%
Investment Own Home Loan P&I 70-80%	-25bps	2.34% p.a.	3.63% p.a.
Neat Home Loan P&I 70-80%	-20bps	2.09% p.a.	2.10% p.a.
Neat Home Loan P&I 60-70%	-20bps	1.99% p.a.	2.00% p.a.

 

TicToc

TicToc Loan Product	Change	New Advertised Rate	Comparison Rate
Investment Fixed P&I 3 yrs	+30bps	2.90% p.a.	2.86% p.a.
Live-in Fixed P&I 5 yrs	+25bps	3.49% p.a.	2.52% p.a.

 

BankVic

BankVic Loan Product	Change	New Advertised Rate	Comparison Rate
Fixed 2 yrs	+44bps	2.49% p.a.	3.71% p.a.
Fixed 3 yrs	+59bps	2.89% p.a.	3.70% p.a.
Fixed 5 yrs	+76bps	3.35% p.a.	3.74% p.a.

 

Gateway Bank

Gateway Bank Loan Product	Change	New Advertised Rate	Comparison Rate
Premium Residential Fixed 3 yrs 150k+	+30bps	3.19% p.a.	356% p.a.
Premium Investment Fixed 3 yrs 150k+	+20bps	3.29% p.a.	3.85% p.a.

 

ANZ to cease Breakfree package

In a bid to offer “simpler” home loans to its clients, ANZ announced that it will remove its Breakfree package from its mortgage line-up.

ANZ group executive for Australian retail and corporate Mark Hand said the Breakfree package, which provides a discounted interest rates for home loans bundled with other financial products, will only be available until March.

“We understand customers want more choice today about how they structure their home loans and our new approach provides that while retaining a discounted interest rate and no annual package fee,” he said.

“This is really good news for our home loan customers who only want to pay for the products and features they value and choose to use.”

Existing Breakfree package customers will retain their current interest rate discounts when they are converted to the simplified home loan proposition in September.

Under the new “simplified” approach to home loans, clients will not be charged to pay for the following:

• A loan approval fee
• Loan administration fees
• Valuation administration fees
• Progress payment fees
• Loan renegotiation fees
• Guarantor administration fees

This announcement came after the Australian Securities and Investments Corporation (ASIC) found that ANZ failed to provide promised benefits within the Breakfree product line.

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Photo by @angelopantazis on Unsplash.