Mortgage lenders are poised for the upcoming Reserve Bank of Australia (RBA) meeting by significantly reducing home loan rates to their lowest in two years. Recently, the Police Credit Union announced a cut in its variable rate to 4.99% for owner-occupiers who have a deposit of at least 20%. This marks the first occurrence of variable rates beginning with a ‘4’ since 2023, according to data from Canstar.
In the past two weeks alone, 13 lenders have decreased at least one fixed home loan rate. Notably, Macquarie Bank, Australia’s fifth-largest lender, reduced its rates by up to 0.20 percentage points. Currently, 17 lenders offer at least one fixed rate below 5%, including Macquarie, Greater Bank, Bank of Queensland, Heritage Bank, and Australian Mutual Bank. The present lowest variable rate has edged just above the lowest fixed rates, despite the potential for further reductions following the RBA’s policy meeting scheduled for August 12.
Sally Tindall, insights director at Canstar, commented on this development, noting, “Variable home loan rates starting with a ‘4’ are finally back on the table after a two-year hiatus.” Banks are strategically presenting competitive fixed-rate offers to customers seeking short-term stability, yet Tindall advised borrowers to carefully consider their options. “If you’re thinking about fixing, make sure you understand the trade-offs; you might be buying peace of mind, but it could come at a cost if rates fall faster than expected,” she cautioned.
Encouraging news regarding possible interest rate cuts was bolstered by newly released inflation data from the Australian Bureau of Statistics, which revealed that headline inflation has slowed to 2.1% over the 12 months ending the June quarter, down from 2.4% in March. This adjustment indicates that headline inflation has now reached the lower end of the RBA’s target range, prompting many economists and analysts to predict that the RBA may opt for a 25 basis point cut in rates at its upcoming meeting, bringing the cash rate down to 3.60%.
In summary, as lenders brace for the RBA’s decision, borrowers may find beneficial opportunities amidst a competitive lending landscape and a shifting economic backdrop, ideal for those weighing their mortgage options.