Mortgage lenders are cutting rates to fight for customers even as three major banks now expect another RBA hike this year.<\/p>\n
National Australia Bank has become the latest major to change its cash rate forecast, tipping a 0.25 percentage point increase at the RBA\u2019s September 28-29 meeting.<\/p>\n
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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.<\/p>\n
Commonwealth Bank and ANZ expect a hike in November, while Westpac expects the RBA\u2019s next move to be a cut in August 2027, according to Canstar. $100bn blow out: Albo under fire over tradies<\/a><\/p>\n Aussies tap super amid $20k deposit gap<\/a><\/p>\n A September hike would add about $91 a month to repayments on a $600,000 mortgage with 25 years remaining, Canstar analysis shows.<\/p>\n The hit would rise to about $122 a month on an $800,000 mortgage and $152 on a $1m loan.<\/p>\n Yet lenders themselves are moving in the opposite direction.<\/p>\n 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.<\/p>\n 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.<\/p>\n Canstar data insights director Sally Tindall said borrowers paying variable mortgage rates starting with a six or seven could be paying a \u201cloyalty tax\u201d.<\/p>\n Canstar data insights director Sally Tindall said persistent underlying inflation was increasing pressure on the RBA to move again.<\/p>\n \u201cSticky core inflation is backing the RBA into a corner, with NAB the latest major to abandon hopes of a pause,\u201d Ms Tindall said.<\/p>\n She said NAB\u2019s economists expected the latest inflation figures to prompt a September hike, with another increase in November potentially required.<\/p>\n 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.<\/p>\n But trimmed mean inflation, the RBA\u2019s preferred underlying measure, remained at 3.6 per cent.<\/p>\n 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<\/p>\n 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.<\/p>\n Ms Tindall said a second increase in November would add another $92 a month to Canstar\u2019s $600,000 mortgage example.<\/p>\n Across five rate hikes this year, including the two hypothetical increases in September and November, the cumulative increase in monthly repayments would reach $456.<\/p>\n \u201cIf 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,\u201d Ms Tindall said.<\/p>\n She said borrowers should not wait for the September meeting before checking whether they could secure a better deal.<\/p>\n \u201cIf your variable rate starts with a \u20186\u2019 or a \u20187\u2019 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,\u201d Ms Tindall said.<\/p>\n 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.<\/p>\n 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.<\/p>\n \u201cLenders are offering better pricing, especially major banks, sitting under 6 per cent,\u201d Mr Berti said.<\/p>\n \u201cThe banks have seen that their volume has dropped, so they are becoming a lot more competitive.\u201d<\/p>\n Mr Berti said competition was extending beyond advertised rates, with lenders increasingly considering exceptions to their usual policies to secure applications.<\/p>\n \u201cThings aren\u2019t so black and white anymore,\u201d he said.<\/p>\n \u201cA lot of exceptions are being approved, especially by the majors, to win business.\u201d<\/p>\n 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.<\/p>\n That equated to about $2412 a year.<\/p>\n 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.<\/p>\n 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.<\/p>\n \u201cDon\u2019t change your repayment, keep the repayment the same,\u201d he said.<\/p>\n \u201cSo more of your repayment will go towards the principal.\u201d<\/p>\n He said borrowers should also review their household budgets before the RBA\u2019s September meeting and examine non-essential spending.<\/p>\n \u201cI\u2019d be cutting back on wants and really focusing on hammering down the mortgage just during this period of uncertainty,\u201d Mr Berti said.<\/p>\n Sign up to the Herald Sun Weekly Real Estate Update. Click here <\/a>to get the latest Victorian property market news delivered direct to your inbox.<\/p>\n MORE: Slain Stuart Rattle\u2019s final Brighton vision revealed<\/a><\/p>\n
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