RBA on hold but some rates on the rise

Even though the Reserve Bank is a long way off from increasing its cash rate, home loan rates are starting to creep higher.

The Reserve Bank's cash rate is at a record low but interest rates for some borrowers have started to rise.

Rates on almost 200 types of loans rose in July, with longer term fixed loans posting some of the largest increases, financial comparison website RateCity says.

This is despite the RBA cutting the cash to a record low of two per cent in May, the latest in a series of eight reductions since November 2010.

RateCity financial analyst Peter Arnold said interest rates normally fluctuate from month to month, but for the first time in four and a half years these rates have started to move upwards on a more sustained basis.

"The biggest movement this time was among the longer-term fixed home loan rates, with five-year fixed rates increasing by as much as 0.3 percentage points, and 0.02 percentage points on average, in July - a significant shift after a long period of downward pressure in recent years," he said.

The game changer in the past month has been all four major banks increasing interest rates for home investors, an effort to take the heat out of the booming housing market, particularly in Sydney, Mr Arnold said.

The Australian Prudential Regulatory Authority last year instructed banks to restrict growth in investor lending to 10 per cent a year to put the brakes on record home price rises.

"If you're a property investor, the low-rate party is ending," Mr Arnold said.

"That said, home loan rates across the board are starting to edge up, with a number of home loans aimed at non-investors rising in July - a trend that we expect to continue."

Comparison website finder.com.au's Michelle Hutchison said the increase in rates for home investors is also bad news for those who are renting.

Finder.com.au's research shows rents could be set to rise by about three per cent as landlords pass on the increased cost to their tenants.

"Whether you're a mortgage holder, renter or prospective first home buyer, watch out for higher costs on the way and make sure you are prepared by keeping some savings aside before it's too late," she said.