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Financial comparison site RateCity’s Michelle Hutchison says many believe the RBA will lower the cash rate by 0.25 basis points to 2.75% on Tuesday and, if they do, she says there’s no reason why lenders shouldn’t pass on the full cut to variable home loan borrowers.
“Most lenders kept some of the rate cuts after every cash rate reduction since November, 2011. But with funding pressures easing and the mortgage market slow, lenders have room and reason to move and it will be disappointing to see them not pass the full cuts onto their variable home loan customers.”
However, even if the RBA decide to keep the cash rate as is, Hutchison says it’s likely we’ll still see lenders cut their variable home loan rates.
#pb# “Lenders have already begun loosening their lending criteria and some have cut variable rates out-of-cycle this year. MyState Financial is the latest to cut one of its variable home loans…reducing its Cash on Hand Line of Credit equity loan by 0.20 percentage points to 6.39%.”
The MyState move follows three other non-bank lenders that have lowered some of their variable rates out-of-cycle last month, including IMB, BMC Mortgage and Holiday Coast Credit Union.
“We have never seen lenders drop their variable home loan rates out-of-cycle and it shows that the mortgage market has changed…borrowers now must expect variable rates to move any moment and more often than they previously were.”
Hutchison encourages borrowers to ‘shop around’, saying most can find better deals that what they’re currently paying.
“It’s easy to become complacent when interest rates fall because borrowers have more money in their pockets. But the reality is you could have a lot more money in your pocket and by adding it to your home loan, you could save even more.”
