With a potential cash rate cut looming and the federal election just concluded, Australia’s home loan market remained largely steady last week, as lenders held off major moves amid uncertainty.
Only two lenders—Macquarie Bank and Police Bank—made changes to rates, according to Canstar.
Macquarie reduced six variable rates for owner-occupiers and investors by an average of 0.11%, while Police Bank made deeper cuts, lowering eight fixed rates by an average of 0.63%.
See the rate changes below.
According to Canstar, the average variable rate for owner-occupiers paying principal and interest now sits at 6.51%.
The lowest variable rate on the market is 5.59%, offered by Pacific Mortgage Group, excluding introductory, first home buyer, and eco-specific offers.
The number of rates listed below 5.75% on Canstar’s database has also risen—now 654, up from 646 the previous week.
Check out the table below for the list of lenders offering rates below 5.75%.
“The mortgage market largely held its breath last week with just two lenders changing rates on the Canstar database,” said Sally Tindall (pictured), Canstar insights director.
“While this is unusual considering we’re just two weeks out from a potential cash rate cut, perhaps the federal election was enough for lenders to push the ‘time out’ button for a moment.”
“At this stage, a cut may be on the cards, however, a double cut is not, particularly now the Trump trade tariffs are starting to look a lot more negotiable,” Tindall said.
Interest-only loans also made headlines with AMP’s introduction of a 10-year interest-only term for both owner-occupiers and investors. While long interest-only terms are common for investors, AMP’s move marks new territory for owner-occupiers.
“For investors, interest-only terms of up to 10 years are nothing new. In fact, late last year, CBA increased its upper time limit for these payments to 15 years for investors, provided borrowers are taking them out in blocks of five years,” Tindall said. “However, for owner-occupiers, a maximum term of 10 years is breaking new ground.”
She cautioned that interest-only terms can be useful in tough times but require careful consideration.
“Interest-only payments can be a short-term solution for some owner-occupiers who have hit tough times, however, it’s a strategy that should only be used in extreme circumstances, where the borrower understands the short- and long-term consequences,” Tindall said.
“Certainly, the regulator warns that owner-occupier interest-only applications should have a ‘sound and documented economic basis’ that isn’t based on someone’s inability to pay off both the principal and interest.”
Tindall also advised borrowers to compare options carefully.
“Anyone looking for an interest-only loan should spend time shopping around,” she said. “While our estimates of RBA data shows the average owner-occupier interest-only rate for new customers is currently sitting at 6.84%, Canstar’s database has the lowest interest-only rate clocking in at under 5.75%.”
Below Is the list of the lowest variable rates on offer in the Canstar database.
