The CBA has moved ahead of the Reserve Bank of Australia and today announced that it will increase its fixed-lending rates.
CBA’s one year fixed rate has been increased by 50 basis points to 6.19 per cent, while its two year fixed rate will see a 30 basis point rise to 6.84 per cent.
The three year fixed rate home loan has gone up 15 basis points to 7.29 per cent and a five year home loan will now be 7.69 per cent – up 10 basis points.
Back in August CBA chief executive Ralph Norris warned that the bank may increase its rates independently of the RBA in response to rising funding costs.
Today’s announcement marks the third time CBA has hiked fixed rates in the last six months.
In August, the bank raised their fixed rate mortgages by as much as 0.6 per cent - after raising rates by up to 0.45 per cent in April.
A CBA spokesperson told Mortgage Business that the bank had been forced to raise rates in line with current market conditions.
“In terms of one to four year mortgages, the cost to the bank is still elevated and we are pricing them to reflect that the cost is more expensive,” the spokesperson said.
While the spokesperson declined to speculate about future rate rises, he did say that the impact of high funding costs were beyond the bank’s control and that the bank would act accordingly.
“CBA needs to make prudent business decisions and do what is best for the business.”