Westpac has kicked off the fixed rate action for 2022, adding 20 points to their longest term rate, the five-year, and 15 points to mid-term rates.
The 5-year fixed now stands at 3.59%, with 4-year at 3.34% and 3-year at 3.04% - in real terms, rises of at least $40 a month for borrowers.
The gap between 2-year at 2.59% and 3-year at 3.04% remains wide, suggesting that Westpac is anticipating the expected rise in the Reserve Bank of Australia (RBA) cash rate to be at some point next year.
All of the Big Four engaged in a wave of rate rises late last year, with more than 20 separate raises, including several banks upping their costs four times within two months in an attempt to factor in expected increases in the cost of funds.
According to RateCity, 17 lenders have already hiked their 3-year fixed rates this year, with none lowering their prices.
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“Westpac is the first big four bank to hike fixed rates in 2022 but certainly won’t be the last,” said Sally Tindall of RateCity.
“The cost of fixed-term funding is rising with inflation in the US hitting its fastest pace in nearly four decades,
“We expect other banks to follow within days on the back of sharp increases to the cost of wholesale funding.
“Mortgage holders who were fortunate enough to lock in a record-low fixed rate over the last couple of years are immune to these hikes, but only for the duration of their fixed rate term.
“Anyone who fixed at the start of the pandemic for two years should start thinking about what their next step might be. When they come off their fixed rate, they’ll be looking at a very different market.
“There are now just 40 fixed rates under 2 percent and the list is shrinking by the week. Some mortgage holders might decide to switch back to a variable rate as there are more sub-2 per cent options available.”