Big banks have started to raise rates on fixed-interest home loans, although the Reserve Bank of Australia has not raised official rates for a decade and signaled on Friday that it was unlikely to do so. done before 2024.
Even with official rates frozen at record highs, banks say wholesale funding costs are rising, in part because of the RBA’s decision earlier this year to stop lending them money at concessional rates.
Interest rates could start climbing in 2023, a year earlier than expected, the RBA said.
But an increase in the policy rate in 2024 remains the central assumption of the RBA, she said in her latest monetary policy statement.
He said he might be forced to hike the official rate a year earlier, but only if inflation and wage growth exceed his current expectations.
The RBA said its “central scenario” remained that wages would rise by more than 3% per year by 2023, ending a pattern of stagnation that has seen growth stay below this level since March 2013.
He predicted that core inflation would be around 2.25% next year, rising to 2.5% by 2023.
“Similar to wage growth, this would represent a significant recovery in core inflation compared to the experience of the past few years,” the RBA said.
However, he said there were “other plausible scenarios” in which wage growth and inflation were higher.
“If that were to happen, an increase in the cash rate in 2023 might be warranted,” he said.
“However, in the opinion of the board of directors, the latest data and forecasts do not justify an increase in the cash rate in 2022.”
He said the economic outlook could also be darker than expected if Australia is hit with a new variant of Covid-19 or if vaccines run out.
Banks did not wait for an official rate hike, which the RBA board left unchanged at a record low of 0.1% when it met on Melbourne Cup day.
NAB was the first bank to charge more for home loans, raising fixed rates by up to 0.2 percentage point last Wednesday.
Westpac followed Thursday this week and the Commonwealth Bank raised its fixed rates on Friday morning, ahead of the RBA’s statement.
Bankers say silver has become more expensive even though the RBA hasn’t raised the official exchange rate for a decade and kept it at 0.1% since November last year.
Part of the reason for this is that in July the RBA closed its term financing facility, which provided banks with $ 188 billion in cheap money during the Covid-19 pandemic.
Wholesale rates are also increasing because traders expect the RBA to raise the spot rate in the future, with the ASX spot rate tracking pointing to a rate above 1.2% of by April 2023.
The CBA raised its fixed rates by 0.1 percentage point, for a fixed term of five years, and by 0.5 percentage point, for a term of four years.
“These changes reflect the sharp increase in financing costs over the past few weeks as well as revised economic forecasts,” a CBA spokesperson said.
Westpac on Friday increased its fixed rates by 0.1 percentage point, for fixed periods of four and five years, and by 0.21 percentage point for loans with a fixed period of three years.
“In making these decisions, we take several factors into account, including the need to manage price changes in a sustainable manner,” said a Westpac spokesperson.
The NAB increased its fixed rates by 0.1 percentage point for all terms between one and four years and increased the five-year rates by 0.2 percentage point.
At the same time, it lowered its standard variable rate by 0.4 percentage point to 2.29%.