Yahoo Finance Multiple major Aussie banks cut interest rates: ‘More to come'
CBA’s Bankwest, NAB’s ubank, ING and Macquarie bank were among those to cut home loan interest rates this week.
More than a dozen Australian banks have cut their fixed and variable home loan interest rates this week. The Reserve Bank of Australia (RBA) board has ruled out cutting the cash rate in the near future, but recent cuts indicate banks are betting on the central bank's next move being down.
Commonwealth Bank subsidiary Bankwest, NAB-owned ubank, ING and Macquarie Bank are among the lenders who have cut mortgage rates on selected loans. A total of 15 lenders have cut rates this week, according to Mozo’s database, with the changes applying to new rather than existing customers.
Mozo personal finance expert Rachel Wastell told Yahoo Finance the cuts made it “increasingly clear” that we were likely at the peak of the RBA’s rate hiking cycle.
The central bank has hiked the official cash rate from a record low of 0.10 to 4.35 since May 2022 but has kept interest rates on hold at their 12-year high since the end of last year.
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“This week’s GDP figures show a slowing economy, there is also a lack of growth in trend terms in household spending, an increase in mortgage arrears and a drop in job vacancies,” Wastell said.
“All of these indicators suggest that it is likely the RBA’s next move will be to cut rates, rather than raise them further.
“We can see this reflected in the recent cuts to home loan rates, particularly longer term fixed rates - where banks have the most opportunity to offer comparably low rates now that will most likely end up higher than variable rates during those fixed terms.”
Are you a borrower holding out for a rate cut? Share your story with tamika.seeto@yahooinc.com
Which banks have cut interest rates?
Bankwest has cut interest rates on most of its fixed rate loans by up to 0.5 per cent, with customers offered a 5.89 per cent rate its 2- and 3-year fixed rates for loan-to-value ratios (LVR) of 80 per cent or less.
ubank has lowered interest rates on selected fixed rate loans with cuts of up to 0.73 per cent.
Borrowers can get a 5.79 per cent rate for two, three and five-year fixed rate terms with an LVR of 80 per cent or less. The bank also cut its flex variable interest rate by up to 0.10 per cent.
ING cut its fixed rates by up to 0.60 per cent. It's offering a 5.84 per cent rate for two, four and five-year fixed rate terms for borrowers with an LVR of 80 per cent or less.
The bank also shaved 0.05 per cent off variable rates for borrowers with LVRs between 80 to 90 per cent.
Meanwhile, Mozo found Macquarie cut its fixed rates by between 0.10 and 0.66 per cent. It is offering a 5.69 per cent rate for 2- and 3-year fixed rates with a LVR of 80 per cent.
Other banks that cut rates included Bank of Sydney, Gateway Bank, Greater Bank, Heritage Bank, IMB Bank, ME, Newcastle Permanent, People’s Choice, Police Bank, Southern Cross Credit Union and Teachers Mutual Bank.
More interest rates cuts to come
Wastell expects “more rate cuts will be coming through from the banks”, particularly in the fixed rate space.
NAB was the first Big Four bank to cut fixed rates in July, with CBA and Westpac following suit in August.
“As the economy cools and the RBA moves closer to cutting rates, lenders are likely to sharpen their deals to attract borrowers,” Wastell told Yahoo Finance.
“One bank we are keeping our eyes on is ANZ, as they are the only Big Four Bank who has not cut fixed rates since NAB started with its three year fixed rate cut back in July.”
Is now a good time to fix my home loan?
Wastell said the decision of whether or not to fix was a “balancing act”. It could give you peace of mind and protect you from future rate cuts, or you could miss out on savings later on should rates drop.
“With the chance of further rate cuts on the horizon, variable rates could very well drop below the lowest fixed rates on offer, so you could be stuck paying a higher rate after the RBA starts the cutting cycle,” Wastell said.
“If you’re on the fence, splitting your loan between fixed and variable rates could be the way to go.
“This option gives you the stability of a fixed rate, while still letting you take advantage of any drops in variable rates.”
When will the RBA cut interest rates?
RBA governor Michele Bullock re-iterated yesterday that talks about interest rate cuts were “premature”.
“If the economy evolves broadly as anticipated, the Board does not expect that it will be in a position to cut rates in the near term,” she said.
Bullock said she and the board understood interest rates hurt households but noted high inflation “hurts everyone and especially the most vulnerable”.
Commonwealth Bank is the only Big Four bank still predicting a cash rate cut this year and thinks it will come in November. Westpac and ANZ expect a rate cut in February 2025 and NAB in May 2025.
Bullock said about 5 per cent of borrowers were facing a “cash flow shortfall”, where their essential spending and mortgage repayments were more than their income.
She said this group would need to make “quite painful adjustments”, including cutting back on spending, dipping into savings or working extra hours.
“Some may ultimately make the difficult decision to sell their homes,” she said.
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