Leading mortgage brokers have expressed uncertainty as to how much of the RBA's 50 basis point cash rate reduction will be passed on to consumers, and expect banks to 'duck and weave'.
Intelligent Finance's Justin Doobov said that the 50 basis point cut, which reduced the cash rate to 3.75% yesterday, was designed to ensure lenders pass on at least 25 basis points to customers.
He said he is expecting a variable rate reduction of at least 35 basis points, but is hoping for more than 40 basis points. He expects fixed rates could drop another 20 basis points.
Jeremy Fisher from 1st Street Home Loans said he is expecting the banks to pass on the majority of the rate reduction on their standard variable rate, but said fixed rates may not move in correlation.
Doobov said the larger lenders would be playing cat-and-mouse before pledging reductions.
"I think the larger lenders will duck and weave to not be the first lender to make an announcement as they don't want to move too much or too little," he said.
Doobov said he had already received many emails from clients hoping for the full rate cut to be passed through, though he said they know that this is "hopeful but unlikely".
Fisher likewise said clients who are getting close to settling on their loans are anxious to see if they will be given some further relief in repayments.
Both brokers applauded the Reserve Bank for injecting confidence into the housing market.
"The rate cut will help provide some confidence in the housing market which was long overdue," Fisher said.
"A for business and the mortgage market in general, this may provide a good boost in activity leading in to the winter months," he added.
"I think it is a confidence boost for buyers that money is cheaper and the numbers are starting to add up on the properties they were looking to invest in," Doobov said.
RBA shocks with 50bp cut