Major bank ANZ lifts fixed mortgage rates ahead of Reserve Bank decision

One of the big four banks has lifted their fixed rate mortgages ahead of Tuesday’s Reserve Bank interest rate decision.

In the lead up to the Reserve Bank of Australia’s (RBA) next meeting, ANZ has hiked its fixed rate offering by as much as 0.25 percentage points.

Fixed interest rates now start with 5.99 and could be as high as 6.34 per cent depending on the length of the loan terms.

According to Canstar one-year, three-year, four-year and five-year fixed mortgage rates rose by 0.10 per cent, while two-year fixed rates are up 0.25 per cent.

Canstar data insights director Sally Tindall said a lift in fixed rates is a major warning sign for all mortgage holders that the cash rate is likely to rise.

“When they start creeping up before an RBA meeting, it’s a sign lenders are pricing in a hike before it materialises,” Ms Tindall said.

During the week ANZ changed its forecast and now believes the RBA will lift interest rates in March and May.

We then expect a pause while the RBA assesses whether the increase in the cash rate is sufficient to contain the inflation risks and give the RBA time to assess geopolitical developments and the global economic outlook,” Adam Boyton, head of Australian economics at ANZ, said.

This would mean the RBA hiked rates three times in a row starting in February, completely reversing the three rate cuts in 2025 and bringing the cash rate back to 4.35 per cent.

Canstar says if all three rate hikes come in, households owing the bank $600,000 will have monthly payments increase by $272.

If the loan is $800,000 monthly repayments jump by $363 a month or if it is a $1m loan households will spend $453 more a month on their mortgages.

ANZ is not alone, with 26 lenders have hiked at least one fixed rate in the last fortnight including bankwest, ubank, Heritage Bank and RACQ.

As a result, the average two-year fixed rate is now 0.21 percentage points higher than the average variable rate, a noticeable change from the start of the year when the average fixed and variable rates were on par with each other.

Canstar says there are currently no fixed rate offerings under five per cent.

According to their database Southern Cross Credit Union is the cheapest one or two-year offering, with rates starting from 5.24 per cent.

As a result of the rate hikes, just four lenders are still offering at least one fixed rate under 5.40 per cent.

At the start of the year, it was 62.

“In the last week alone, many economists have increased their cash rate hike expectations on the back of already high inflation that could rise even further from soaring petrol prices. As a result, some borrowers could now be thinking about flipping over to fixed,” Ms Tindall said.

“If that’s you, don’t panic. Walk through the decision with a calm and clear head, noting the risks on both sides and the extra rules and restrictions that come with locking in your rate.”