Australia’s home loan market saw further rate shifts this week, with both upward and downward movements across lenders, according to Canstar’s latest Weekly Rate Wrap-up.
BankVic raised two variable rates by 0.05%, while Illawarra Credit Union lifted the fixed rate on its Bare Essentials Investment two-year interest-only loan by 0.20%.
At the same time, four lenders cut 44 fixed rates for both owner-occupiers and investors, with the average drop recorded at 0.23%.
Canstar data showed the average variable interest rate for owner-occupiers paying principal and interest is now 6.51%, while the lowest variable rate on offer across any LVR tier is 5.59%, provided by Pacific Mortgage Group (excluding introductory, first-home buyer, and eco rates).
There are now 786 home loan rates below 5.75% listed on Canstar’s database—up from 773 the previous week—indicating heightened competition and pricing pressure among lenders.
With the Reserve Bank of Australia (RBA) set to announce its latest cash rate decision at 2:30pm today, borrowers are holding their breath, according to Sally Tindall (pictured), Canstar insights director.
“Will the RBA cut or will they hold? That’s the question front and centre of millions of borrowers’ minds in the lead up to 2.30pm today,” Tindall said. “While the market consensus might be in favour of a cut, for the RBA it is likely to be an incredibly close call.”
She said that while core inflation may give the RBA the green light to cut, the economy and labour market are still holding up, and inflation isn’t fully under control. In her view, these aren’t compelling reasons for a rate cut — especially for a cautious RBA.
“The one primary reason to cut the cash rate would be to give variable borrowers relief,” Tindall said. “It’s been three long years since the RBA began hiking the cash rate and for many of [them], it’s three years that, financially, they’d rather just put behind them.”
Economists from Westpac, CBA and ANZ all expect a 25-basis-point cut, while NAB has forecast a more aggressive 50-basis-point move. Westpac’s Iliana Jain said inflation and wage growth have eased enough to justify beginning a rate-cutting cycle, noting, “We’re pretty much of the view here that the main cut is locked in.”
Meanwhile, global factors are influencing sentiment. Economists said US-China trade tensions and uncertainty over tariffs earlier in the year pushed the RBA toward a more cautious stance. However, with inflation easing and unemployment holding steady at 4.1%, expectations are growing for a rate move today.
Regardless of today’s decision, Tindall encouraged borrowers to review their current rate and take advantage of a more competitive lending environment.
“Regardless of the RBA’s decision tomorrow, it’s an opportune time for borrowers to take stock of how their interest rate stacks up against the pack,” she said.
“The latest ABS data out last week pointed to a refinancing resurgence with almost 100,000 loans switching in the first three months of the year—the highest since the September quarter of 2023.
“Is it then a coincidence we saw banks start to cut new customer variable rates from about March onwards? Probably not. Banks are in the mood to negotiate on the back of this revival and there’s plenty of new customer discounts to take advantage of.”
Tindall said borrowers with strong repayment histories are well-placed to secure a better deal.
“Canstar.com.au is tracking 35 lenders offering at least one variable rate under 5.75%,” she said. “If you’ve got a solid repayment history, you’re in a strong position to cut your interest costs.”
