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ISCOVER
Staff Reporter
For the first time in almost two years, a major lender has lifted its fixed rates, prompting one brokerage to predict other lenders will soon follow suit.
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Westpac has become the first major bank to lift fixed home loan rates in almost two years, taking its two-year fixed rate to 5.29 per cent.
The move promoted Loan Market’s corporate spokesperson Paul Smith to speculate that fixed rate products may have reached their lowest point.
Mr Smith said funding volatility and improvements in the Australian economy would likely trigger higher fixed rates throughout 2013.
“While there remains a downward outlook on variable rates, fixed interest rates are now likely to rise and soon interest with standard variable rates. For many homeowners, the window to lock in a fixed rate that’s lower than a variable one is closing fast,” he said.
Mr Smith said this was the beginning of a shift in the home finance market as the banks and lenders react to improvements in the domestic economy and the limited movements of the Reserve Bank of Australia (RBA).
“There’s certainly still scope for the RBA to lower the cash rate in the coming months, as some sectors are still lagging whilst others are showing steady improvement.
“If lenders start to increase the rates of their fixed products, they’re likely not anticipating the same downward pressure from the market to drop their variable rate interest rates. We could be moving to the point in the interest rate cycle where variable rates are lower than fixed rates,” Mr Smith said.
