Fixed rates on the March in June

Australian bank fixed-term mortgage rates have increased in recent weeks, while the short-term rate market is pricing in several more interest rate increases.

In minutes from the June 2008 Reserve Bank policy meeting: "The Board noted that the bulk of indicators becoming available over the past month continued to suggest moderation in the growth of domestic demand."

The RBA may be pausing for thought at the moment, with the cash rate in June left unchanged for the third month in a row at 7.25 per cent, with the last quarter per cent rise in March.

The interest rate market, though, has priced at least two more quarter point rises in the short term.

In the week to Friday June 20, the 90-day bill rate fell eleven points to 7.82 per cent, but the 180 rate jumped 14 points to 8.21 per cent.

Banks have been unwilling to increase their ongoing variable rate in recent months, which for Australia's major five banks remains within a tight three point band ranging from 9.44 per cent to 9.47 per cent, due to the unwanted media bank bashing.

Increasing fixed rates on mortgages in turn makes the ongoing variable more attractive, which is the preferred option for banks with the current positive short term yield curve.

The Australian Finance Group May 2008 sales report, a leading indicator of borrower trends as the broker accounts for a tenth of all mortgages written in Australia, reported demand for fixed rate loans fell to 13.7 per cent of new business for the month, down a third on April and almost half on March.

In the last fortnight ANZ increased all fixed term loans ranging from two to ten years by 20 points, with NAB's Tailored Home Loan one through five years and ten year increasing by four to 34 points.

The Westpac one- to three-year terms increased by between eleven and 21 points, with four- through ten-year terms all up four points.

St George moved upwards by 20 to 30 points for one- through five-year terms.

ING Direct raised one- through five-year terms by ten points, with Suncorp increasing by 25 to 40 points its one-, two-, three- and five-year fixed loans.

Strugglers Aussie upped one- through five-year terms by 40 to 55 points, with Wizard increasing two-, three- and five-year terms by 20 points.

Interest rates and changes that have taken effect since 8 June 2008 to 20 June 2008, are supplied by InfoChoice www.infochoice.com.au.