An increase in funding costs has led to banks raising their fixed rates as they walk away from the ultra-competitive rates offered during the pandemic.
Before a key Reserve Bank meeting this week, Australia’s biggest banks have been pushing up their fixed rates and walking away from the ultra-competitive approach they took to attract customers to this type of mortgage during the pandemic.
RateCity research director Sally Tindall said banks were no longer interested in offering the lowest fixed rates on the market because of factors including an increase in their funding costs. “Banks were fighting tooth and nail for customers during COVID but refinancing has become costly for banks, so they want the churn to stop,” Tindall said. “When it comes to banks lifting their fixed rates, it’s more a matter of why not.”
Banking analysts also believe competition in mortgages has eased lately – UBS this month said its data showed competition between the big four had become more “rational.”expectations of where official rates are headingCanstar group executive Steve Mickenbecker said the case for falling interest rates – and therefore falling fixed rates – was fairly weak.
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