The four major banks have raised their fixed rates in response to the increase in funding costs.

Ahead of an important Reserve Bank meeting this week, Australia’s largest banks have been raising their fixed rates and abandoning the highly competitive approach they adopted during the pandemic to attract customers to this mortgage type.

NAB raised its fixed rates for both owner-occupiers and investors on Friday, marking the second increase within a week. This resulted in some rates surging by up to 0.5 percentage points in just eight days, indicating that the major banks are attempting to counterbalance the impact of escalating funding costs.

Following similar increases by CBA, Westpac, and ANZ earlier this month, all four major banks in Australia now have fixed rates above 6 per cent. These adjustments pertain only to new fixed-rate loans and do not impact the rates paid by existing customers.

Sally Tindall, the research director at RateCity, stated that banks have ceased offering the most competitive fixed rates due to various factors, including a rise in funding costs. Over the past year, there has been a significant escalation in funding expenses, affecting both fixed and variable rates. The increase in cash rates worldwide has further contributed to the overall cost of funding becoming more expensive.