Westpac is the first major bank to increase interest rates on its fixed rate home loans and investment loans, but market watchers expect others to follow.
Property investors who take a Westpac five-year fixed rate mortgage from next week will see an increase of 0.6 percentage points to 4.59 per cent in the interest rate - the biggest of the increases.
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ASIC calls out banks on mortgages
The corporate watchdog disputes big bank claims that mortgages that track Reserve Bank interest rates would be too expensive.
Those who already have a Westpac fixed rate loan will be unaffected.
Figures provided by comparison site Canstar show property investors taking a Westpac five-year mortgage from next week who borrow $450,000 will pay an extra $158 dollars a month in repayments over 30 years.
The Westpac five-year fixed rate home loan interest rate for owner-occupiers will jump by 0.54 percentage points to 4.39 per cent.
One and four-year fixed rates for both owner occupiers and investors remain unchanged. Rates on two and three-year terms for owner occupiers and investors will rise by up to 0.3 percentage points.
The changes also apply to Westpac's subsidiary St George and separate increases apply to another subsidiary, RAMS.
A swag of smaller lenders has also announced increases in their fixed rates over the past fortnight, though ME Bank has increased the variable rate for new customers on its 'owner occupier' Flexible Member Package well as some of its fixed rates.
NAB-owned UBank has also increased variable rates by 0.1 percentage points, affecting new and existing mortgage holders from December 2, though its fixed rates are unchanged.
Rates have 'bottomed'
Mitchell Watson, the research manager at Canstar, says the increases reflect a view that interest rates have bottomed at a record low of 1.5 per cent.
Watson is expecting there to be more rate rises iin the coming days and weeks. "That presents an opportunity for those already in the market of a fixed rate to lock-in low rates now," he says.
However, Watson warns that Canstar research shows that those taking fixed rates loans only get the fixed rate call right about 50 per cent of the time.
Banks and lenders are attributing these recent increases to higher international funding costs, due to uncertainty in global debt markets following the outcome of the US election.
In addition, it is highly likely that the US Federal Reserve will hike rates in December and that will increase the chance of an eventual rate rise in Australia.
Bessie Hassan, money expert at comparison site, Finder, says, while its mostly fixed and investment loans so far "we expect some further increases in variable rates too."