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If you are rushing to fix your mortgage – stop! The banks are way ahead of you.

That all the big five institutions have now put up interest rates independent of the Reserve Bank is disturbing indeed. But the last thing you should do is panic and commit to a rate for the next few years.

Why? The banks knew that increasing the variable rate to cover higher costs due to the credit crunch would generate bad publicity.

So, in anticipation of a rush to lock in rates, some quietly upped fixed loans about a week before variable loans. In other words, they sought to cash in on the reaction.

You can’t have missed that the big five have now increased their variable rates: in order, NAB, ANZ, CBA and, on Friday, St George and Westpac.

ANZ and St George raised their rate by a high 0.2 percentage point (to 8.77 per cent) and copped criticism as a result. Westpac moved a more moderate 0.15 (to 8.72 per cent), NAB by a lower 0.12 (to 8.69 per cent) and CBA by an even smaller 0.1 (to 8.67 per cent).

What you didn’t see on the news, however, was that in early January ANZ lifted its fixed rates by 0.25 – more than it subsequently increased the variable rate.

But that’s not a patch on biggest lender, the Commonwealth. By only raising variable rates 0.1, it managed to come off as almost magnanimous – except that it had already upped fixed rates by 0.3 percentage points.

By contrast, NAB, Westpac or St George did not seek to cynically profit from customers who were spooked by the increase into fixing. More….

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