Major bank economists maintain their forecasts that the central bank will begin easing its tightening bias this year, with the ‘Big Four’ falling in line with a November rate cut call.
The big banks arrived at a consensus after Westpac and CommBank, which both initially pencilled in a September start to rate cuts, pushed back their forecasts on the back of stronger-than-expected March quarter inflation.
Australia’s headline inflation rate was 3.6% annually, overshooting market expectations of 3.5%.
The trimmed mean measure also came in stronger at 4%, well above the central bank’s forecast for the annualised rate to land at 3.8%.
CBA head of Australian economics Gareth Aird called it an "unwelcome set of numbers".
“The recent inflation data coupled with a lower unemployment rate than we anticipated at this juncture means we push back the timing of our base case for the RBA to commence an easing cycle,” Mr Aird said.
Despite the anticipated delay, and predictions by experts on the other side of the fence that borrowers must brace for possible rate hikes, the majority of home loan lenders have moved their rates south.
Market-wide, InfoChoice database analysis of April movements indicates a decrease in interest rates across various loan types, with lenders reducing their rates by an average of 16 to 27 basis points.
The average rate for owner occupiers on variable rates paying P&I is now lower, at 6.42% p.a. for example.
Here are some of the highlights from this week, keeping in mind these are likely for new customers only.
Qudos Bank lowers variable rate investment mortgages
One of Australia’s largest customer-owned banks slashed its variable rate investor home loans, trimming up to 20 basis points on its No Frills and Low Cost products.
Carrying Qudos Bank’s lowest rate of 6.24% p.a. (6.24% p.a. comparison rate*) is the Investment No Frills Home Loan with a 70% loan-to-value ratio (LVR) paying principal and interest (P&I).
Investors looking for an interest-only (IO) mortgage can secure the 6.44% p.a. interest rate (6.38% p.a. comparison rate*) of Investment No Frills with 70% LVR.
This is the second consecutive week Qudos Bank lowered its No Frills mortgage.
On the other hand, those looking for more features like a credit card and offset account should check out the newly adjusted rates of Qudos’ Low Cost Home Loan Investment P&I:
- 70% LVR: down 20 basis points to 6.34% p.a. (6.52% p.a. comparison rate*)
- 80% LVR: down 20 basis points to 6.44% p.a. (6.62% p.a. comparison rate*)
- 90% LVR: down 10 basis points to 6.84% p.a. (7.02% p.a. comparison rate*)
RACQ Bank rocks the variable home loan space
Queensland’s RACQ Bank has joined the handful of lenders offering variable rates within the 5% p.a. threshold, after dropping the rates on its wide range of products this week.
The Brisbane-based member-owned bank has rolled out its Fair Dinkum Home Loan with 5.99% p.a. interest rate (5.99% p.a. comparison rate*) available for owner-occupiers and first home buyers with 60% LVR.
Meanwhile, investors seeking the lowest variable rate can get 6.19% p.a. (6.19% p.a. comparison rate*) through the Investment Fair Dinkum Home Loan with ≤60% LVR.
Here are the other rates available for owner-occupiers:
- Fair Dinkum Home Loan 60%-70%: 5 basis point cut to 6.09% p.a. (6.09% p.a. comparison rate*)
- Fair Dinkum Home Loan 70%-80%: 10 basis point cut to 6.14% p.a. (6.14% p.a. comparison rate*)
- Fair Dinkum Home Loan 80%-95%: 30 basis point cut to 6.54% p.a. (6.54% p.a. comparison rate*)
While these new rates are offered to investors:
- Investment Fair Dinkum Home Loan 60-70%: 15 basis point cut to 6.29% p.a. (6.29% p.a. comparison rate*)
- Investment Fair Dinkum Home Loan 70-80%: 20 basis point cut to 6.34% p.a. (6.34% p.a. comparison rate*)
- Investment Fair Dinkum Home Loan 80-90%: 40 basis point cut to 6.74% p.a. (6.74% p.a. comparison rate*)
RACQ Bank also applied widespread cuts across its range of fixed rate products.
Adelaide Bank moves the other way
Adelaide Bank bucked the trend of rate drops by applying a 15 basis point boost to its basic and fully featured variable rate home loans.
The no-frills SmartSaver P&I with ≤80% LVR now offers 6.24% p.a. (6.24% p.a. comparison rate*) after this week’s adjustments.
Meanwhile, the SmartFit Variable P&I ≤80%, which comes with a 100% offset account, is now up to 6.24% p.a. (6.41% p.a. comparison rate*).
Here are the other boosted rates:
- SmartSaver P&I 80-90%: up 15 basis points to 6.54% p.a. (6.54% p.a. comparison rate*)
- SmartSaver P&I 90-95%: up 15 basis points to 7.88% p.a. (7.88% p.a. comparison rate*)
- SmartFit Variable P&I 80-90%: up 15 basis points to 6.54% p.a. (6.70% p.a. comparison rate*)
- SmartFit Variable P&I 90-95%: up 15 basis points to 7.88% p.a. (8.03% p.a. comparison rate*)
Adelaide Bank, the wholesale banking division of Bendigo and Adelaide Bank Group, offers these home loans through its network of mortgage brokers.
Greater Bank hikes rates
Customer-owned Greater Bank boosted its variable home loans up to 6 basis points this week.
The Great Rate Discount Variable ≤80% carries the lender’s lowest owner-occupier mortgage rate at 5.99% p.a. (6% p.a. comparison rate*).
For investors, the Great Rate Discount Investment Variable ≤80% paying principal and interest offers 6.14% p.a. (6.15% p.a. comparison rate*).
Fixed rates go down
Several more home loan lenders dropped their fixed rates this week.
Bank of China slashed its investor and residential home loan rates up to 100 basis points.
Following its big move last week, Illawarra Credit Union returned to drop 40 basis points more on its investment home loans.
Unity Bank applied a 25 basis point cut across its residential and first home buyer mortgages.
The Mutual Bank cut 20 basis points on its standard and package home loans.
Easy Street Financial Services and Community First Bank both trimmed 10 basis points on their range of owner-occupier and investment home loans.
But one moves up
The only increase in fixed mortgages was delivered by Regional Australia Bank, which boosted its rates by up to a hefty 152 basis points.
Photo by Scott Webb on Pexels
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