Fixed mortgage rates rise after extended period of declines

Bank of Queensland (BoQ) and HSBC took the spotlight during a relatively quiet week of home loan rate movements, raising the rates on their fixed mortgages for both owner-occupiers and investors.

Both bank's adjustments reversed the cuts they applied across their products earlier this year, suggesting a change in tack amid expectations of higher for longer interest rates.

The RBA Board recently elected to leave the cash rate unchanged as inflation refuses to fall fast enough to reach the range where they feel more confident to loosen their tightening bias.

Though the latest unemployment data indicates a softening jobs market and wages growth moving past its peak suggests moderating labour demand, punters warn some of the measures announced in the 2024-25 Budget may upend the gains that lower inflation.

The Federal Budget is set to deliver short-term incentives including the $300 energy bill rebate for all Australians ($325 for small businesses) and the 10% boost on Commonwealth Rent Assistance.

Treasurer Jim Chalmers is confident these items aimed at providing cost-of-living relief won't add inflationary risks and, will, in fact, bring inflation down towards the target range by December this year.

By comparison, the RBA expects that to happen a year later, in December 2025.

"The ABS has shown how cutting energy bills directly cuts inflation," Dr Chalmers said.

However, Real Estate Institute of Queensland (REIQ) chief operating officer Dean Milton said that while energy rebates may apply a short-term downward pressure on inflation, the median-to-long-term impact could be inflationary.

"Instead of the energy bill rebate cash splash to all Australians, our view is that the Federal Government could have shown more restraint and means-tested eligibility to ensure it goes to those that need it most," Mr Milton said.

He also believes the stop-gap support for renters should have been supplemented by more long-term reforms that address housing undersupply.

"[T]he supply side initiatives which included commitments to states and territories to deliver long-term infrastructure to support new residential development are still a marathon away from equating to homes," he said

Whether these measures bring inflation up or down - and consequently, the cash rate lifted or slashed - we'll find out in a couple of months.

In the meantime, these lenders appear less optimistic that interest rates will move south after they raised the rates on their fixed-rate mortgages.

Bank of Queensland ups fixed rates

While not as big a lender as the Big Four banks, BoQ commands a fair share (2.7%) of the home lending market, holding over $59 billion worth of residential and investment mortgages on its books.

This week's adjustments were applied to its owner-occupier and investment home loans with fixed terms between two to five years.

BoQ's lowest fixed rate of 5.99% p.a. is available through its Discount Rate three-year fixed residential home loan available to new customers.

Similarly, new customers taking out investment mortgages can secure BoQ's lowest rate - 6.14% p.a. - if they opt for a term fixed for three years.

The minimum amount for Discount Rate home loans is $150,000, and the loan-to-value ratio (LVR) is up to 90%.

Here are the new rates of the Queensland bank's Discount Rate fixed home loans for owner occupiers with up to 80% to 95% LVR:

Investors seeking a principal and interest (P&I) home loan with up to 90% LVR may want to check out these rates available for new customers:

HSBC hikes fixed home loans

Australia's 10th largest lender (for both investors and owner occupiers), HSBC joined this week's movers also to overturn the widespread cuts on its fixed-rate home loans earlier this year.

HSBC upped the rates on its 90 fixed mortgage products, maxing at a 30 basis point hike.

Prior to this week, the lender's most recent move was a fixed rate drop of up to 80 basis points in February.

HSBC's lowest fixed rate for owner occupiers - 5.99% p.a. (5.99% p.a. comparison rate*) - is available through its Home Loan Package with 60% to 80% LVR paying P&I.

The same rate applies across all terms, from one year to five.

The Home Loan Package with 60%-80% LVR (1-5 years) also offers the lowest rate for investors paying P&I repayments at 6.19% p.a. (6.19% p.a. comparison rate*).

HSBC's package home loans feature zero upfront and monthly fees as well as discounts off the reference rates for an annual fee of $390.

Read more: RBA Home Loans News Home loan rate changes

Bernadette Lunas

Finance Journalist

Bernadette is a journalist with years of experience covering topics in macroeconomics, real estate, and lifestyle beats for notable print media organisations. She joined the InfoChoice Group in 2024, bringing her passion for writing stories that help Australians make better decisions about money.

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