Australian Banks Cut Home Loan Rates Despite RBA Holding Cash Rate
Synopsis
Multiple lenders have lowered mortgage rates to attract borrowers and refinancers, signalling stronger competition even as the Reserve Bank keeps interest rates on hold.
Key Highlights
- Banks cut home loan interest ratesRBA held as 18 lenders cut variable mortgage rates only for the eighth time.
- The lowest variable refinance rate was cut by Bendigo Bank, down 0.15 percentage points to 5.89%
- AMP cut a number of its fixed home loan rates by up to 0.50 percentage points.
Banks slash home loan interest rates RBA hold as 18 lenders lowered variable home loan rates after Reserve Bank of Australia left cash rate unchanged at 4.35% in June Bendigo Bank was the most significant of these in cuts with its lowest rate for refinancers now 5.89%, a reduction of 0.15 percentage points, according to Canstar research.
They also recently pointed out that Bendigo Bank is now one of 15 lenders with rates below the 5.90% mark but the peak home loan rate in Australia persists because those best home loan rates still sit at around the 5.69% mark.
Competition Creates Refinancing Opportunities
Canstar Data Insights Director Sally Tindall said the latest cuts highlight the ongoing stiff competition among lenders.
She said competition is giving borrowers the chance to be able to lower their borrowing costs, but refinancing usually provides more substantial savings than what you can get from simply negotiating with an existing lender.
Fixed home loan rates also decreased, slipping 0.22 percentage points on average across five lenders during the week. AMP has been at the forefront of these changes, with some having as much as a 0.50 percentage point reduction in fixed rates, that’s two nominal standard cash rate cuts to you and me.
RBA Expected to Stay on Hold
APRA high-quality mortgage data most recently reveals a small rise in home loans between 30 and 89 days within the ARREARS from previous RBA rate rises in March. Yet, they represent only 0.49% of all home loans showing that the mortgage market is not cracking yet.
The share of interest-only loans ticked up to 11.8% of all mortgages but still sits below average, indicating that borrowers are not flocking to take out loans where they only have to pay interest rather than principal as well.
As lenders continue to cut rates, most economists are also expecting the RBA cash rate to hold. The majority of economists surveyed by The Australian Financial Review do not expect the cash rate, which was lifted to 4.35%, to rise any further.
Paul Bloxham, chief economist for Australia at HSBC expects for an extended pause whilst forecasting that the next official RBA rate cut is unlikely to occur before around mid-2027. The next scheduled policy meeting of the Reserve Bank, which is when it will assess interest rates again, happens to be in August.
Source: Yahoo Finance
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