Home loan rates could increase by a further 50 basis points, despite speculation of a Melbourne Cup day rate cut, one industry expert has warned.
Whilst the Reserve Bank chose to keep rates on hold at 2% yesterday, 1300HomeLoan managing director John Kolenda says the market could see further interest rate relief before the end of the year, possibly as soon as Melbourne Cup day. However, the increased cost of funding for banks – which has already seen some interest rates rise – means brokers and homebuyers should expect more “out of cycle” rate hikes.
“The
RBA has some history in playing a part on Melbourne Cup day and we may see the central bank cut rates once more on the first Tuesday in November or before the end of the year,” he said.
“The decision of many lenders to raise interest rates for investment and interest only loans as well as revised borrowing conditions has already had an impact on many borrowers with more expected.
“We are likely to see increases from 25 to 50 basis points in out of cycle movements by many banks as they adjust their pricing to accommodate additional costs. They face a balancing act between managing home loan growth and shareholder returns.”
Rate rises have only affected investment and interest-only home loans so far, but Kolenda says it is likely to become more widespread.
“Over the next six to nine months we may see increases in rates across the board with the pressure on the major banks to meet APRA measures by June next year. This will likely see rates increase for owner-occupied in the future.”
