The
RBA’s decision to leave the cash rate on hold, combined with strong competition from lenders, is good timing for those wanting to refinance or activate a home loan - and for brokers.
The Reserve Bank announced yesterday afternoon the cash rate would remain at 2.5% for the sixth consecutive month.
James O’Loan, spokesperson for comparison website HelpMeChoose.com, says the historically low costs of borrowing are in stark contrast to the rising costs of living.
“Today’s decision not to lift the cash rate will be welcomed by Australians enduring a sustained period of price increases to several household items and bills, including utilities,” says O’Loan.
“It remains crucial though for borrowers to assess a potential lender’s rates, fees and the features on offer before making an informed decision that suits their circumstances.”
Brokers are in a position to help borrowers make these comparisons, and help clients make sense of the recent product and rate changes introduced by many lenders.
In the past lenders have generally moved with the cash rate, but in the last month 42 home loan rate changes were recorded by 14 lenders, says finder.com.au spokesperson Michelle Hutchison.
“Of those, only two from the big banks have lowered their fixed rates,
Westpac and
NAB both decreased their three-year fixed package home loan by 0.05 percent to 5.14 percent.
“Of the 14 lenders that changed their rates, HSBC, Citibank, UBank and
ME Bank have lowered their fixed rates between 0.10 and 1 percentage points while the latest variable rate change came from HSBC lowering their rate by 0.59 percentage points.
"This could signal a ripple effect in the coming months as more lenders begin to compete.”
Hutchison says it’s important for borrowers to capitalise on the competition now, particularly for those who are taking on more loan debt.
“There are currently 35 variable rate and 46 fixed rate loans under 5 percent,” says Hutchison.
“This is good news for borrowers as you no longer have to wait for the cash rate to change. You can capitalise on the competition from lenders by comparing loans and switching to cheaper deals."
With the strong Australian economy the decision to hold rates was widely anticipated by economists.
Laing+Simmons general manger Leanne Pilkington says the decision should reinforce optimistic views in the industry provided banks maintain the same approach.
“This decision means there is no immediate pressure for banks to revise their lending terms, so buyers can proceed with some certainty,” Ms Pilkington said.
