Commonwealth Bank has been quietly lifting its four-year fixed rates. Picture: NCA NewsWire/Bianca De Marchi
Commonwealth Bank has been quietly lifting its four-year fixed rates. Picture: NCA NewsWire/Bianca De Marchi

Banks move to ditch long-term low fixed rate offers

A raft of lenders including the Commonwealth Bank and Bendigo Bank are quietly ditching their ultra-low four-year fixed rate offers, pushing borrowers into shorter-term financing options in the face of a hot property market.

The move comes as Australians have been rushing into fixed loans at a record rate, as homeowners seek to lock in cheap financing for the long term. Confidence among homeowners has been boosted by the Reserve Bank of Australia repeatedly saying it has no plans to raise the official cash rate until 2024.

But money markets are pricing in cash rate rises before then, prompting some banks to move away from deeply discounted long-term fixed loans.

Ten lenders hiked their four-year fixed rate last month, while many more cut their shorter fixed rates, according to figures compiled by comparison website

The two-year fixed rate was cut by 25 lenders, while 18 institutions cut their three-year fixed offering. research director Sally Tindall says the record-low four-year fixed rates are "unprecedented but now the economic recovery is well underway, they're unlikely to stick around".

"While the RBA has made it clear the cash rate isn't moving until at least 2024, we expect to see at least one rate hike at that time, provided there are no more major economic hurdles between now and then.

"As a result, a number of these four-year rates are now starting to come off the table as some banks move to factor in at least one cash rate rise in 2024," Ms Tindall said.

Record-low interest rates have led to Australians piling into the buoyant property market.

A wave of new home listings hit the market last month, leading to the fastest property price growth in the residential market in more than 32 years.

RateCity’s Sally Tindall.
RateCity’s Sally Tindall.

CoreLogic's monthly property price index recorded a 2.8 per cent national jump last month, the fastest rate of growth in 30 years, when prices were up 3.2 per cent.

Brokerage UBS has over recent months been predicting a 10 per cent rise in prices this year, but UBS Australia chief economist George Tharenou now sees risks to the upside and is forecasting gains of 15 per cent. He expects policymakers will look to allow the economy recovery for another six months before stepping in to cool a heated housing market.

As banks have been working harder to push the cheap fixed funding into the market, the monthly value of new fixed-rate housing loan commitments, including refinancing, has more than tripled, from $4.7bn immediately pre-pandemic, to $15.7bn in February, according to non-seasonally adjusted data from the Australian Bureau of Statistics.



Usually around 10-15 per cent of new home lending is done at a fixed rate, but according to an analysis by ANZ economics this had soared to closer to 40 per cent by the start of 2021.

The nation's biggest bank CBA increased its four-year fixed owner-occupier, principal and interest home loan rate by 0.20 per cent to 2.19 per cent.

Bendigo Bank, Bank of Queensland and Service One Alliance Bank raised their four-year fixed rates by 0.30 per cent, the steepest rise among the 10 lenders.

Close behind was Adelaide Bank, which lifted its four-year fixed rate by 0.29 per cent. Others include Aussie Home Loans, Teachers Mutual Bank, Firefighters Mutual Bank, UniBank and Health Professionals Bank.

Westpac, St George and Bank of Melbourne boasted the lowest four-year fixed rate of 1.89 per cent, according to's database.

The housing market is running hot in Australia. Picture: NCA NewsWire / Gaye Gerard
The housing market is running hot in Australia. Picture: NCA NewsWire / Gaye Gerard

Two lenders, Hume Bank and People's Choice Credit Union, cut their four-year fixed rates last month.

In addition, a raft of lenders including CBA, National Australia Bank, Westpac, St George, Bendigo Bank and Adelaide Bank, cut their one, two and three-year fixed rates in a bid to entice homeowners.

Variable rates were cut by 16 lenders including Suncorp Bank, St George Bank, Bank of Melbourne, BankSA during last month. That compared to hikes by Reduce Home Loans, Regional Australia Bank, Freedom Lend (Construction Home Loan) and Mortgage House.

Ms Tindall said people should check their existing mortgage rate against what your bank is offering new customers for the same loan.

"If you haven't renegotiated your rate recently, chances are you're paying more," she said.

"Don't limit your research to just one bank however. There are over 120 different lenders in the mortgage market - use that competition to your advantage and shop around."

Originally published as Heat comes out of fixed rate loans

Second teen dies following horror Wolvi crash

Premium Content Second teen dies following horror Wolvi crash

Wolvi crash claims life of Gympie teen Zac Moye

Truck, car and ute collide on Gympie highway

Premium Content Truck, car and ute collide on Gympie highway

One person has been treated by paramedics following the crash in the heart of the...

EXPLAINED: Everything you can do now restrictions have eased

Premium Content EXPLAINED: Everything you can do now restrictions have eased

Everything you can do now COVID-19 restrictions have eased