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Interest rates cut by Aussie bank ahead of RBA move

Macquarie Bank takes 'drastic measure' that new customers can benefit from.

A major Australian bank has dropped its interest rates as economists speculate whether the Reserve Bank of Australia (RBA) will cut the cash rate at all this year. Macquarie Bank, Australia’s fifth-largest lender behind the Big Four, has cut its standard variable home loan rates — with some dropping as much as 0.10 percentage points.

Unfortunately, if you’re already with Macquarie these cuts won’t apply to you. They are just for new owner-occupiers committed to paying principal and interest repayments, who have a bigger deposit, or a loan-to-value ratio (LVR) of below 70 per cent.

Macquarie Bank’s lowest advertised variable rate is now 6.14 per cent, which finance expert David Koch told Yahoo Finance wasn’t the only out-of-cycle rate cut Australian borrowers could take advantage of.

The circular logo of Macquarie Bank adorns the foyer as Australia's biggest investment bank announces a full-year net profit of 1.04 billion USD in Sydney on April 29, 2011. Macquarie Group Ltd's net profit, down nine percent on the previous financial year, was broadly in line with expectations given subdued equity market conditions.  AFP PHOTO / Torsten BLACKWOOD (Photo by TORSTEN BLACKWOOD / AFP) (Photo by TORSTEN BLACKWOOD/AFP via Getty Images)
Macquarie Bank has dropped interest rates as economists speculate if the RBA will drop interest rates at all this year. (Source: Getty) (TORSTEN BLACKWOOD via Getty Images)

Do you have a story to tell? Contact yahoo.finance.au@yahooinc.com

ME Bank has also moved on fixed interest rates, dropping by as much as 0.6 per cent on some offers.

“The RBA mightn’t budge over the next few months but that doesn’t mean homeowners should have to sit and suffer bad rates,” the Compare the Market economic director said.

“Banks are competing hard to attract and retain customers but it’s really up to borrowers to force those moves.

“We have seen some banks apply drastic measures with some swooping in at the 11th hour with an incredible offer.”

This isn’t the only interest rate cut Macquarie has delivered this year, dropping variable rates for customers with a 70 per cent LVR from 6.17 per cent to 6.15 per cent in February.

In January, it cut its basic variable home loan rates by up to 0.21 percentage points for new customers, with the biggest drop for owner-occupiers and investors with small deposits (10 per cent or less) who commit to paying principal and interest.

The bank also slashed its fixed rates by up to 0.56 percentage points and cut its three-year fixed rate down to 5.99 per cent for customers with a deposit of 30 per cent or more.

Macquarie is cementing itself as a competitor with the big four banks, growing its home loan market share to 5.3 per cent in March from 2.5 per cent in 2020, according to statistics from the Australian Prudential Regulation Authority.

The RBA board will meet on May 6 to determine the cash rate and are widely expected to hold. Economists are not factoring in a cut until much later in the year, if at all.

Off the back of unexpected quarterly inflation growth, Westpac no longer thinks interest rates will drop in September, joining economists from ANZ and NAB in a November prediction.

Others think borrowers are in for more pain, with potential hikes on the cards this year.

Judo Bank chief economic adviser Warren Hogan thinks the RBA will have three 0.25 point increases this year, which would take the cash rate to 5.1 per cent.

Hogan believes the RBA needs to raise the cash rate above 5 per cent, like the United Kingdom, United States and New Zealand, and reckons the rises will come in the August, September and November meetings.

Big Four banks’ interest rate predictions for 2024:

  • CBA: Three cuts in 2024 with the first in September

  • Westpac: Two cuts in 2024 with the first in November

  • NAB: One cut in 2024 in November

  • ANZ: One cut in 2024 in the fourth quarter

Koch said Australians feeling mortgage pressure should not wait for the RBA to drop rates, noting the economy would have to be "in a depression" to return to ultra-low rates.

“I think people have got to get used to the fact that interest rates at these levels are not high," he said.

"In terms of history, this is sort of a normal level for interest rates. It's a shock coming from basically zero to where we are now but it's just been getting back to normal.

However, there is an option to reduce your costs.

“Better deals could be available to you now,” Koch added.

An analysis by Compare the Market found there are interest rates as low as 5.94 per cent and someone with a $750,000 home loan on a rate of 6.74 per cent could save $402 on their monthly repayments.

Macquarie customers could also contact the bank and ask if they’d compete with offers given to new borrowers.

Mortgage size

Monthly repayments with an owner-occupied variable rate of 6.74 per cent

Monthly repayments with an owner-occupied variable rate of 5.94 per cent

Difference

$500,000

$3,240

$2,978

$262

$600,000

$3,888

$3,574

$314

$750,000

$4,870

$4,468

$392

$900,000

$5,831

$45,361

$470

$1,000,000

$6,479

$5,957

$522

Reserve Bank Lenders’ Interest Rates. Monthly repayments do not include any reduction in the mortgage balance over time. These calculations assume: An owner-occupied variable interest rate of 5.94%; principal and interest (P&I) repayments; the loan term is 30 years; and there are no monthly