Borrowers are bracing for more rises in variable loan costs if cash rates rise at Tuesday’s meeting of the Reserve Bank of Australia.
CBA, the nation’s largest mortgage lender, has raised fixed interest rates for investors and owner-occupiers by 140 basis points, increasing pressure on a housing market already struggling with rising costs.
A bank spokesman blamed the rises, which applied from Thursday, on “increases in funding costs and as a result of current market conditions”.which is where banks, companies and governments borrow money.It is expected to be followed by increases in variable rates if the Reserve Bank of Australia proceeds with widely expected increases in the cash atCBA raised rates for new and existing variable customers by 50 basis points following the June cash rate rise.
CBA’s five-year rates have jumped to 6.69 per cent, or 60 basis points higher than its nearest big four rival. The cheapest fixed five-year rate is 4.79 per cent from Southern Cross Credit Union. Mortgage broker Phoebe Blamey, a director of Clover Financial Solutions, said: “This is going to weaken an already nervous residential property market. But I wouldn’t be surprised if competitors start trying to grab CBA’s fixed rate market share.”
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