The Australian mortgage market has shown quite the range of interest rate adjustments over the past week, reflecting the ongoing adjustments by financial institutions in response to economic signals, Canstar has reported.

Lenders adjust variable and fixed rates

Canstar’s latest weekly interest rate wrap-up highlighted several key changes in the landscape of home loan interest rates. 

Three lenders upped 15 owner-occupier and investor variable rates by an average of 0.06%. Conversely, Great Southern Bank cut two of their owner-occupier and investor variable rates by an average of 0.25%.

In terms of fixed rates, five lenders reduced a whopping 78 owner-occupier and investor fixed rates by an average of 0.33%.

The current average variable interest rate for owner-occupiers paying principal and interest stands at 6.90% for an 80% LVR, with the lowest variable rate at 5.69%, an introductory offer by Australian Mutual Bank.

Canstar’s database now boasts 20 rates below 5.75%, an increase from the previous week’s count of 19. These rates are available at Australian Mutual Bank, HSBC, LCU, People’s Choice, Police Credit Union, RACQ Bank, and Regional Australia Bank.

Wondering if one of these lenders might be a good fit for you? Click here first to understand the importance of using a mortgage broker instead of going straight to the bank. 

As recently demonstrated by last weeks Bankwest saga, it’s a numbers game for the banks – in case you were still under the illusion that your years of loyalty to them will somehow pay off in the long run. Bottom line is, they are running a business and you are a number. 

Will the RBA lower the cash rate this month? 

Steve Mickenbecker, Canstar’s finance expert, suggests that the notable reduction of fixed rates from five lenders points to an inevitable rate Reserve Bank rate cut in the near future. 

The 0.2% GDP growth for the December quarter, a decline from the June quarter’s 0.3%, may cause the RBA to reconsider its previous rate hikes, or at least continue the holding pattern. 

Mickenbecker also suggested that while the data might not point to the classical definition of a recession, a lot of people are certainly feeling the pinch. 

“We’re not technically in recession but to a lot of people, it will feel like it,” he said, suggesting that the economic indicators may not fully capture the lived experiences of Australians.

The general consensus – especially among the major bank economists – is that rate cuts will begin in the second half of the year, however, some believe that it may come sooner.

Speaking to The Adviser, Vincent Woodgate, managing director of Woodgate Finance, said he expects to see inflation return to the low 3 per cent range by mid-2024, followed by a reduction in interest rates by “early June/July”.

However, chief executive of Home Loan Experts, Alan Hemmings, told The Adviser he is hesitant to believe that the RBA will cut rates by the end of the year.

“Although inflation continues to fall, it is still above the 2–3 per cent band the RBA likes. We also still have inflationary pressures, including migration and the proposed tax cuts in July that will put more money in people’s pockets,” he said.

“Adding to this, the RBA will be nervous about cutting rates too quickly and heating up the property market. Although cost of living is having an impact on everyone, we still saw an increase in property prices during 2023.”

However, Commonwealth Bank boss Matt Comyn says the Reserve Bank may not cut interest rates until early 2025. To justify this prediction, Comyn “persistent” inflation, compounding cost of living pressures for borrowers counting on tax cuts and mortgage relief.

CBA economists predict the RBA will start reducing rates from September, but Mr Comyn told The Australian Financial Review “there is certainly a possibility that could be delayed” until the new year, after US inflation data came in stronger than forecast.

Financial markets pushed back their own bets of the likely timing of RBA easing to December, from September. Just last week, financial markets had implied two cuts this year but that timeline fell to pieces after the RBA kept its tightening bias intact.

How can a mortgage broker help?

While the general consensus is that, yes, rates will come down, when is still a matter for the RBA to decide. We expect rates will remain on hold at their next meeting and at least for the next few months. If you’re wondering if you can secure a better interest rate for your home loan, you can find out easily by using our obligation free rate check tool. 

Using one of the best mortgage brokers perth has to offer is a step in the right direction to achieving your financial and property goals. We offer industry leading practices to ensure that you can consolidate savings and find a home loan with features that suit your changing needs. We’re available to take you through your options at a time and place that is convenient for you. Click here to book an appointment.

*Please note this information is general. This content is for general informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. We encourage you to consult your own tax, legal and accounting advisers before engaging in any transaction.

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