.jpg)
A well-known industry association has released a statement of support in response to the reduction in fixed interest rates for new borrowers recently instituted at two major banks.
“The decisions are interesting because they put pressure on the other major banks to at least match them or risk losing more market share. That’s exactly why Westpac moved after the CBA,” explained MD of the FBAA, Peter White.
“In March there was a sharp decline in short term bank funding rates and the smaller banks were already revising down.”
Recent data indicates that 40 lenders have lowered rates since the beginning of 2019.
According to White, the downward moves at the two majors were not surprising given this increased competition “from lenders who were more competitive across the loan products.”
There is growing speculation that there will likely be one, possibly more, interest rate reductions by the Reserve Bank later this year.
“Consumers will be keeping a close eye on the big banks when the official rates do go down. I expect the banks won’t pass on the rate cuts in full, which will lead to more confusion for borrowers trying to get the best deal,” said White.
Nearly 60% of borrowers currently source their home loans through brokers rather than going directly to the lender, a figure that seems likely to climb if events unfold as White has predicted.
