Australia's mortgage rate market sent conflicting signals last week, with lenders simultaneously raising and cutting rates across both variable and fixed products — a pattern Canstar insights director Sally Tindall (pictured) says reflects the market's inability to read where the cash rate is headed.
According to Canstar's weekly rate wrap, eight lenders increased 75 owner-occupier and investor variable rates by an average of 0.24%, while five lenders cut 19 variable rates by an average of 0.10% over the same period. The fixed rate market was equally divided, with five lenders lifting 40 fixed rates by an average of 0.11% and four lenders cutting 64 fixed rates by an average of 0.30%.
The average variable rate for owner-occupiers paying principal and interest now sits at 6.67%, with the lowest variable rate for any LVR at 5.69%, offered by LCU. Just three rates below 5.75% remain on Canstar's database, down from four the previous week.
Tindall said the week's movements reflected a lending market that simply does not know which way the cash rate will go.
"You only have to look at last week's mortgage rate movements to know lenders don't know which way the cash rate will go," she said. "The last of the lenders to pass on the May RBA hike did so last week, yet five lenders took the knife to some of their new customer rates, with a couple, namely Community First and Queensland Country Bank, doing so to get their lowest mortgage rates into a more competitive position below 6%."
The big four are no more unified. NAB and Westpac made recent rate hikes on fixed products, while ANZ and Macquarie moved in the opposite direction with cuts.
"The big banks are grappling with this fine line in relation to their fixed rates," Tindall said. "No trend there, only uncertainty."
Consumer sentiment is adding to the complexity, with the Westpac-Melbourne Institute index sitting near 50-year lows and GDP growing just 0.3% in the March quarter — conditions that pull against further tightening but do not yet clearly signal the path to cuts.
The most significant development of the week came from NAB, which revised its cash rate outlook. Abandoning its previous expectation of one further hike later this year, the bank now believes the cash rate has peaked, with cuts expected from the second quarter of 2027 and the cash rate reaching 3.60% by the end of 2027.
"It's easy to remember a time when uncertainty was this high – COVID is still fresh in most people's memories – but difficult to recall one where the risks were balanced on both sides," Tindall said.
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