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In the lead-up to the Reserve Bank of Australia's (RBA) next board meeting, competition among lenders continues to impact home loan rates, with several banks making adjustments. Over the past week, some lenders have increased their fixed and variable rates, while others have slashed rates in response to market dynamics.
For instance, AMP Bank raised two of its owner-occupier and investor variable rates by 0.05%, while seven other lenders, including Bank of China and Bank First, cut 31 variable rates by an average of 0.34%.
Bank of China led the pack with a 0.94% reduction, while Bank First followed with a 0.42% reduction. Fixed rates saw mixed movements, with three lenders increasing 45 rates by an average of 0.57%, while 13 lenders reduced 169 rates by an average of 0.23%.
“There are now just under 40 lenders on Canstar.com.au offering at least one variable rate under 6%–a step up from around 30 a couple of months ago. The slow but steady rise in the number of lenders offering variable rates under 6% is testament to the competitive pressures between the low cost lenders to post advertised variable rates that start with a 5,” said Sally Tindall (pictured), Canstar data insights director.
The average variable interest rate for owner-occupiers paying principal and interest currently stands at 6.85%, with the lowest variable rate at 5.75% by Abal Banking. According to Canstar’s database, the number of rates below 5.75% has decreased, with 215 rates now below this threshold.
“Macquarie Bank’s surprise hike to its market-leading fixed rates last Tuesday did little to stem the flood of fixed rate cuts this week, with 13 lenders opting to cut 169 fixed rates. There was also a higher-than-normal number of lenders sharpening their advertised variable rates with a string of smaller name lenders including IMB, Newcastle Permanent, and ME,” Tindall said.
As the RBA’s next meeting approaches in the next two weeks, all eyes will be on upcoming inflation data, which could influence further rate decisions.
“The jobs numbers out last Wednesday posted yet another strong result, with the unemployment rate holding steady at 4.1%. This alone gives the RBA enough cover to hold its line that cash rate cuts in 2024 are unlikely,” Tindall said.
This combination of competitive pressures among lenders and strong employment figures suggests the housing market will continue to see shifts in loan rates, even as the RBA is expected to hold steady on cash rate decisions in the near term.
