Multiple Aussie banks have cut their home loan interest rates in the last week, with one major lender making a surprise double cut. The moves come despite the Reserve Bank of Australia (RBA) holding the cash rate in June, with expectations rate cuts are off the table for the rest of the year.
A total of 18 lenders have cut their variable home loan interest rates, Canstar analysis revealed. Bendigo Bank was the “standout”, cutting its lowest variable rate for refinancers by 0.15 percentage points, taking it to 5.89 per cent.
Bendigo Bank is now one of 15 lenders offering a rate below 5.90 per cent, however, it still trails behind market leaders who are offering 5.69 per cent.
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“The cut is yet another sign there’s competition in the mortgage market, with the total number of lenders to have lowered new customer variable rates now at 18,” Canstar data insights director Sally Tindall said.
“Competition among lenders continues to create opportunities for some households to cut their borrowing costs. Negotiating with your lender can get you on your way, but the bigger gains still typically come from refinancing.”
Fixed rates are also dropping, with five lenders cutting rates by an average of 0.22 percentage points during the week.
AMP led the cuts, cutting some fixed rates by as much as 0.50 percentage points, or the equivalent of two cash rate cuts.
Loans 30 to 89 days in arrears rose slightly in March following the RBA’s rate hikes, the latest APRA data showed. However, this is just 0.49 per cent of the loan book and is well below average, showing the mortgage market is still resilient.
“Similarly, the value of home loans on interest-only loans rose marginally in the March quarter to 11.8 per cent of all mortgages, also below average — evidence existing borrowers aren’t switching over to interest-only in search of relief from rising rates,” Tindall said.
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RBA rate cuts ruled out until 2027
Economists have all but ruled out another interest rate cut from the RBA until well into 2027, with the prospect of another rate hike still on the table.
A slim majority of the 32 economists polled for The Australian Financial Review’s latest quarterly survey said the cash rate had peaked at 4.35 per cent
HSBC chief economist Paul Bloxham expects an “extended pause” and estimates it will take at least until the middle of next year for the RBA to start easing.
