In a week marked by international trade upheaval, the pace of mortgage rate reductions has dramatically slowed across Australia, according to the latest Canstar report.
Just three lenders cut fixed rates last week while variable rates remained unchanged, creating what Sally Tindall from Canstar describes as “one calm in a tariff storm” following US President Donald Trump’s latest round of trade levies and subsequent retaliatory measures from affected nations.
According to Tindall (pictured above), the sluggish rate activity comes as ANZ dramatically shifted its cash rate forecast, now predicting the Reserve Bank will implement three consecutive rate cuts at its May, July and August meetings – a significant change from its previous outlook of just one cut in August.
“Should we see three standard cash rate cuts in quick succession, the average borrower with a $600,000 mortgage and 25 years remaining could see their minimum monthly mortgage repayments drop by a further $269 by the tail end of this year – assuming the banks pass each one on in full – by no means a guarantee,” Tindall said.
Despite the promising forecast, Tindall warned homeowners against banking on these potential savings too early, stating there are too “many unknowns.”
“Borrowers with a mortgage should not start banking rate cuts into their budgets. With so many unknowns still yet to fall back down to Earth, it’s way too early to take a stab at the full impact and the net outcome,” she said.
The report reveals the average variable interest rate for owner-occupiers making principal and interest repayments sits at 6.53%, while the lowest variable rate available is 5.59% from Pacific Mortgage Group for loans with a maximum LVR of 60%.
Among the limited movements recorded, Bank of China reduced one investor variable rate by 0.10%, while Northern Inland Credit Union, Police Bank and The Mutual Bank cut a combined 14 owner-occupier and investor fixed rates by an average of 0.28%.
Horizon Bank bucked the trend by increasing its variable rates by 0.25%.
The data shows 441 home loan products across Australia currently offer rates below 5.75%, with Pacific Mortgage Group leading the competitive space. Other lenders with attractive rates include Homestar Finance, People’s Choice and RACQ Bank – all offering rates of 5.64% for qualifying borrowers.
“If you’ve got a mortgage, don’t count on any further relief from the RBA but rather go out there and get it yourself,” Tindall said.
She further noted that “there are around 35 lenders offering at least one variable rate under 5.75% for owner-occupiers who have made a decent dent in their debt.”
Tindall also cautioned that while RBA cuts would provide welcome relief for variable rate holders if inflation continues easing, “If the RBA ends up firing off three more rate cuts in quick succession, it’s likely that there’ll be bigger problems at play.”
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