In yet another sign that interest rates have bottomed out, some lenders have begun raising their mortgage rates, and more are expected to follow.
Firstmac, Australia’s largest non-bank lender, and nine other lenders have raised their mortgage interest rates by up to 45 basis points (0.45%), according to the Australian Financial Review (AFR).
The AFR also quotes Martin North, principal of Digital Finance Analytics as saying, “International funding costs are rising, which is the fallout from the Trump effect. Other lenders are likely to follow.”
The Trump effect refers to the election of Donald Trump as US president and that impact on interest rates around the world. Rates are expected to begin rising, particularly in the US, and the rest of the world may follow.
Firstmac has raised its one to three-year rates on both owner-occupier and investor loans by up to 13 basis points – although you could hardly call them uncompetitive. The owner-occupier rate is 4.09% while the investor mortgage rate is 4.34%.
Jessica Darnbrough, a spokesperson for broker Mortgage Choice Limited (ASX: MOC), has told the AFR, “When lenders start to lift the pricing on their fixed rates, the variable rates don’t tend to fall any further.”
Bank of Queensland Limited (ASX: BOQ) has increased the rates on its three-year owner occupied and investment loans by 20 basis points, along with the Illawarra Credit Union, Catalyst Money, loans.com.au and Beyond Bank.
Even Westpac Banking Corp (ASX: WBC) is moving some rates up, cutting its introductory discount rate on its “flexi-first” products by 10 basis points.
It’s unlikely to be much longer before other banks including the rest of the majors Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd (ASX: NAB) follow suit.
Now might be the perfect time to lock in some long-term low interest rates on your mortgage.
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