Mortgage lenders are cutting rates to fight for customers even as three major banks now expect another RBA hike this year.

National Australia Bank has become the latest major to change its cash rate forecast, tipping a 0.25 percentage point increase at the RBA’s September 28-29 meeting.

Mortgage borrowers face conflicting signals as three major banks tip another RBA rate hike this year while dozens of lenders cut variable home loan rates to chase customers.

Commonwealth Bank and ANZ expect a hike in November, while Westpac expects the RBA’s next move to be a cut in August 2027, according to Canstar.
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A September hike would add about $91 a month to repayments on a $600,000 mortgage with 25 years remaining, Canstar analysis shows.

The hit would rise to about $122 a month on an $800,000 mortgage and $152 on a $1m loan.

Yet lenders themselves are moving in the opposite direction.

Canstar data shows 35 lenders have lowered variable rates for new customers since June 1, including refinancers, while 52 now offer at least one variable loan below 6 per cent.

Fourteen lenders have joined the sub-6 per cent group in the past three months, with the lowest variable rates tracked by Canstar starting at 5.69 per cent.

Canstar data insights director Sally Tindall said borrowers paying variable mortgage rates starting with a six or seven could be paying a “loyalty tax”.

Canstar data insights director Sally Tindall said persistent underlying inflation was increasing pressure on the RBA to move again.

“Sticky core inflation is backing the RBA into a corner, with NAB the latest major to abandon hopes of a pause,” Ms Tindall said.

She said NAB’s economists expected the latest inflation figures to prompt a September hike, with another increase in November potentially required.

ABS figures released on August 26 showed headline inflation eased to 3.5 per cent in the year to July, down from 3.8 per cent a month earlier.

But trimmed mean inflation, the RBA’s preferred underlying measure, remained at 3.6 per cent.

A September RBA rate hike would add about $91 a month to repayments on a $600,000 mortgage with 25 years remaining, Canstar analysis shows. Picture: Canva

Household spending figures released on August 27 showed spending rose 7 per cent in nominal terms compared with July last year, while discretionary spending increased 7.8 per cent.

Ms Tindall said a second increase in November would add another $92 a month to Canstar’s $600,000 mortgage example.

Across five rate hikes this year, including the two hypothetical increases in September and November, the cumulative increase in monthly repayments would reach $456.

“If we see back-to-back increases in September and November, as NAB has potentially flagged, borrowers with a $600,000 mortgage and 25 years remaining could be hit with an extra $183 a month in minimum repayments,” Ms Tindall said.

She said borrowers should not wait for the September meeting before checking whether they could secure a better deal.

“If your variable rate starts with a ‘6’ or a ‘7’ as an owner-occupier, you are likely paying a loyalty tax that can be instantly shaved off by shopping around, or at least haggling with your current bank,” Ms Tindall said.

Berti Financial director and senior finance broker Daniel Berti said banks had become increasingly competitive, with major lenders offering mortgage rates below 6 per cent.

Berti Financial director and senior finance broker Daniel Berti said lenders had become noticeably more aggressive in trying to win mortgage customers as application volumes softened.

“Lenders are offering better pricing, especially major banks, sitting under 6 per cent,” Mr Berti said.

“The banks have seen that their volume has dropped, so they are becoming a lot more competitive.”

Mr Berti said competition was extending beyond advertised rates, with lenders increasingly considering exceptions to their usual policies to secure applications.

“Things aren’t so black and white anymore,” he said.

“A lot of exceptions are being approved, especially by the majors, to win business.”

In a separate example based on a $600,000 principal-and-interest mortgage over 30 years, Mr Berti calculated a borrower could save about $201 a month by reducing their rate from 6.5 per cent to 5.99 per cent.

That equated to about $2412 a year.

Homeowners are being urged to shop around as lenders cut mortgage rates despite growing expectations the RBA could increase the cash rate again this year.

Mr Berti said borrowers who secured a lower rate should consider maintaining their existing repayment amount, where affordable, so more money went towards reducing the principal.

“Don’t change your repayment, keep the repayment the same,” he said.

“So more of your repayment will go towards the principal.”

He said borrowers should also review their household budgets before the RBA’s September meeting and examine non-essential spending.

“I’d be cutting back on wants and really focusing on hammering down the mortgage just during this period of uncertainty,” Mr Berti said.

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