Brokers have reacted positively to Macquarie’s out-of-cycle rate cuts, as Australia’s fifth largest lender looks set to continue its bullish approach to building its mortgage lending business.
Macquarie was the first major lender to slash rates, potentially signalling a definitive end to the rate rising signal amid the Reserve Bank’s cash rate meeting on the first Tuesday of February.
Interest rates: Is the tide starting to turn?
On Jan. 30, the bank issued brokers a new rate card that included 21-basis-point reductions to Macquarie’s basic and offset variable mortgages across all LVR bands.
This brings its 80% owner-occupier tier to a variable rate of 6.19% p.a. (6.21% p.a. comparison rate), according to Mozo.
For comparison, the Mozo database average for similar home loans is 6.85% p.a. – 66 basis points higher.
Macquarie also slashed its fixed rate product by 38 basis points based on owner-occupier and investment loans available for $500,000 at 80% LVR.
Macquarie Basic Home Loan new interest rate changes - 30 January 2024
|
LVR Tier |
New interest rate |
Mozo database average |
Difference |
|
< 60% |
6.15% p.a. (6.17% p.a. comparison rate*) |
6.77% p.a. |
62 bp |
|
< 70% |
6.15% p.a. (6.17% p.a. comparison rate*) |
6.81% p.a. |
66 bp |
|
< 80% |
6.19% p.a. (6.21% p.a. comparison rate*) |
6.85% p.a. |
66 bp |
|
< 90% |
6.39% p.a. (6.41% p.a. comparison rate*) |
7.13% p.a. |
74 bp |
|
< 95% |
7.19% p.a. (7.22% p.a. comparison rate*) |
7.38% p.a. |
19 bp |
Mozo averages for variable home loans with 80% LVR (OO, P&I).
Blake Murray (pictured above left), director and finance broker at Blue Crane Capital, welcomed the news.
“This will have a positive impact on household borrowing capacities and general household outgoings each month,” Murray said.
Sheree Chin (pictured above centre), buyers agent for Your property Pal, acknowledged the elephant in the room.
“It will be interesting to see if other banks follow suit. They might be waiting on the RBA announcement before making the call,” Chin said.
“It’s going to be a big year in the real estate scene. Competition between property buyers will be fierce if it wasn’t before.”
Shane Heness, a mortgage broker at Loan Buddy (pictured above right), chose not to speculate. However, he found encouragement in the news that Newcastle Permanent, a smaller bank, had also announced decreases to both fixed and variable rates.
“Rate drops are starting to happen already… Is the tide starting to turn? Watch this space.”
Comparing Macquarie’s mortgage books to the big four banks
Macquarie was one of the lenders of choice last year, continuing its reputation as Australia’s fastest growing lender over the past five years, according to the latest APRA banking data.
This was largely driven by the bank’s new owner-occupier loans, which grew by $8.9 billion between December 31, 2022, and December 31, 2023 – a 14.7% increase year-on-year.
In comparison, Commonwealth Bank (CBA) grew its owner-occupier books by $6.8 billion – a miserly 1.91% increase throughout 2023 after experiencing a dip midyear.
The rest of the big four banks performed relatively well.
NAB’s new owner-occupier loan book increased by $9.8 billion (4.97%) over 2023 but ended the year with a subdued December, posting modest growth of $331 million increase across its total mortgage books.
Investor loans generally stagnated across the industry due to heavy refinancing activity and the rate rising cycle.
Overall, Australia’s mortgage market expanded by $9.19 billion over December, ending the year being worth $2.5 trillion.
All eyes turn to the RBA’s February decision
Financial markets are currently indicating that there is almost no likelihood of an interest rate increase happening in February.
Instead, the first rate cut is anticipated to occur in September.
Major bank economists also share this view, with CBA and Westpac predicting the initial rate cut to happen in September, while NAB and ANZ foresee it in November.
Looking further ahead, predictions about interest rates vary among the big four banks. They expect the cash rate to range between 2.85% and 3.6% by the end of 2025.
However, others think it could be earlier, with AMP chief economist Shane Oliver suggesting that slowing inflation might prompt the RBA to lower rates as early as June.
