Australia’s home loan market is experiencing a week of contrasting rate changes, according to Canstar’s latest Weekly Rate Wrap.
While some lenders are raising rates, others are making aggressive cuts, particularly to fixed loan offerings, reflecting mixed economic signals and speculation around the Reserve Bank’s next move.
Suncorp Bank lifted eight variable rates for both owner occupiers and investors by an average of 0.02%, while Bankvic went the other direction, slicing four investor variable rates by an average of 0.21%.
Meanwhile, three lenders slashed a combined 44 fixed rates by an average of 0.50%, including one of the big four—NAB—a move widely interpreted as pricing in an interest rate cut in May.
“This week’s mixed bag of rate moves tells a story of a market in flux with lenders jostling to balance funding pressures, competitive positioning and an increasingly uncertain economic backdrop,” said Sally Tindall (pictured), Canstar’s insights director.
While some lenders like NAB are clearly positioning for rate relief, the Reserve Bank remains cautious.
“Three lenders took the knife to fixed rates, including big four bank NAB, in a sign banks are factoring in the possibility of a rate cut at its next meeting in May. Certainly, the economists at NAB believe it will be a double cut,” Tindall said.
“The RBA, however, isn’t so sure, with Governor [Michele] Bullock saying last week ‘it will take some time to see how all of this plays out.’”
All four major banks now forecast rate cuts beginning in May, though the pace and depth of cuts vary across institutions:
While a single rate cut remains possible in the near term, Tindall said the central bank’s reserved tone suggests that a double cut scenario may be too ambitious for now.
The tug-of-war among lenders is providing opportunities for borrowers.
The average variable interest rate for owner-occupiers paying principal and interest is now 6.53%, while the lowest available rate sits at 5.59%, offered by Pacific Mortgage Group.
According to the Canstar database, the number of home loan rates under 5.75% increased to 488, up from 441 the previous week.
With the federal election approaching, both major parties are pushing housing-focused policies to attract first-home buyers. Tindall pointed to a raft of proposals including:
While these initiatives could help unlock more buying power, the Canstar leader issued a word of caution:
“The ultimate winners? Anyone selling their property would have to be front and centre unless we build more homes as a priority,” Tindall said. “While there are policies in place from both major parties to achieve this, at this point, it’s probably wiser to believe it when you see it.”
With the market poised between economic caution and competitive lending strategies, borrowers and policymakers alike will be watching RBA’s May decision closely.
