ANZ has been called the "de facto" price setter for home loan rates ahead of the RBA's decision tomorrow.
ANZ will announce its rate decision on Friday April 13, and RateCity chief executive Damian Smith has predicted that other lenders will wait for the bank's move, regardless of the outcome of Tuesday's RBA meeting.
"ANZ Bank’s new monthly rate review has more or less become the de facto price setter for the industry. We believe that most lenders will wait until after ANZ reviews rates on Friday April 13 before deciding whether to move their own rates. This doesn’t mean the RBA isn’t relevant – far from it. It just means we now need to know both the RBA’s decision and the ANZ’s decision before seeing what the rest of the market will do," Smith said.
Smith forecast a high likelihood of a rate cut either this month or when the RBA next meets in May.
"Benign inflation data and ongoing weakness in consumer spending and confidence, especially in the eastern states, certainly gives the Reserve Bank scope for a rate cut," he said.
Should the RBA cut, Smith said lenders may once again choose to pass on only part of the move to borrowers, regardless of easing funding pressures.
"Wholesale funding cost pressures appear to have eased compared to two months ago, but there’s little doubt that the big four banks in particular would prefer to pass on less than the full rate cut. For example, if the RBA cuts the cash rate by 0.25%, the big four would probably prefer to only pass on 0.15% to variable rate customers," he said.