Home loan rates have been on the move, with significant shifts in both variable and fixed rates from various banks, Canstar’s latest rate wrap-up showed.
HSBC has increased eight owner-occupier and investor variable rates by an average of 0.74%, while six lenders have cut 26 owner-occupier and investor variable rates by an average of 0.10%.
When it comes to fixed rates, six lenders have increased 56 fixed rates by an average of 0.21%, while four lenders have reduced 39 fixed rates for owner-occupiers and investors by an average of 0.15%. This has led to a widening spread between fixed and variable rates.
“We live in interesting times, with increasing traffic in interest rate changes in spite of no Reserve Bank cash rate movement since November 2023,” said Steve Mickenbecker (pictured above), Canstar’s group executive for financial services and chief commentator.
“There is a widening of the spread in favour of fixed rates below variable, with six banks bumping up variable rates by an average of 0.1% while four cut fixed rates by an average of 0.15%,” Mickenbecker said.
In a notable move, NAB has cut its three-year fixed rate by 0.60% to 5.99%.
“That’s an enticing 0.8% below its lowest variable rate and 0.85% below its base variable rate,” Mickenbecker said.
He added that this cut would test borrowers’ trust in predictions for rate cuts in 2025.
The average variable interest rate for owner-occupiers paying principal and interest is 6.88%. The lowest variable rate for any LVR is 5.75%, offered by Arab Bank, with 17 rates below 5.75% on Canstar’s database.
Additionally, 13 banks have increased term deposit rates by an average of 0.61%.
“Banks are locking in funding costs, emboldened by projections for a cash rate cut drifting further into 2025,” Mickenbecker said.
The June quarter Consumer Price Index (CPI) release next week will be crucial.
“Next week’s June quarter CPI release will be a big moment of truth informing the Reserve Bank’s decision a few days later,” Mickenbecker said.
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