The RBA is expected to hold the cash rate at its meeting next week, but that hasn’t stopped banks from changing their rates. · Source: AAP/Getty
Multiple banks have begun slashing their home loan interest rates, despite predictions the Reserve Bank of Australia (RBA) will hold the cash rate at its meeting next week. Two of the Big Four banks predict the next time the central bank moves, it’ll be down, not up.
Since the RBA last hiked the cash rate in May, there have been 11 lenders who have gone the other way and cut at least one variable home loan rate for new customers. That includes popular lenders like ING and BOQ.
Canstar data insights director Sally Tindall said lenders had “taken the knife” to new customer rates in a bid to lure new business in the door.
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“While existing customers will naturally be a bit miffed by such moves, what this tells us is that competition in the mortgage market is heating back up and there are discounts to be had for those willing to play ball,” she said.
“The RBA is set to pull the handbrake on the cash rate next week, and while the conversation has shifted to when the first cut might arrive, the reality is we’re still a long way from the central bank shifting it in reverse.”
Following the rate cuts, there are now 40 lenders offering at least one variable rate under 6 per cent. That includes Big Four bank Westpac, along with ING.
Fixed home loan interest rates have been more mixed.
ANZ and Macquarie Bank cut selected fixed home loan interest rates last week. But the majority of the fixed rate market is still trending up, with Westpac and NAB recently hiking rates.
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Three big banks predict rate pain over
NAB reversed its forecast this week, scrapping its previous forecast for one final hike in August.
The major bank now thinks we have reached the peak of the cycle at 4.35 per cent. It predicts the RBA will start cutting rates in the second quarter of next year, with the cash rate ending the year at 3.6 per cent.
“The next move in the cash rate is likely to be down, but the timing is uncertain,” NAB chief economist Sally Auld said.
“In February, growth was above trend, the economy was operating above capacity and there was uncertainty over the restrictiveness of rates. None of these conditions exist today.”
Commonwealth Bank is predicting the RBA will remain on hold until early 2027 and is pencilling in rate cuts in May and August next year.