Home loan rates kept falling this week even as the Reserve Bank's tightening cycle continues, with Canstar data showing no lender lifted rates in the seven days to 19 July and eight lenders trimming fixed or variable pricing instead.
Five lenders — Australian Mutual Bank, Firefighters Mutual Bank, Health Professionals Bank, Teachers Mutual Bank, and UniBank — cut ten investor interest-only variable rates by an average 0.15%, while Horizon Bank, ING, and Woolworths Team Bank trimmed eight fixed rates across owner-occupier and investor loans by an average 0.16%.
Canstar group manager – research Josh Sale (pictured) pointed out that this week's move takes the running total of lenders cutting variable rates since the RBA's May hike to 23. Sale said the trend reflects lenders competing harder for a smaller pool of borrowers rather than any softening in the RBA's stance.
"Lenders cutting in a year where the cash rate has risen three times might look strange, but it is textbook competition,” Sale said. “Home values fell in June at the fastest monthly pace since late 2022, Sydney and Melbourne are going backwards. Fewer buyers mean fewer new loans, so lenders are sharpening their new customer pricing to fight over a shrinking pool of borrowers."
The average variable rate for owner-occupiers on principal and interest currently sits at 6.66%, while the lowest available rate for any LVR is 5.69%, offered by both LCU and Pacific Mortgage Group. Three lenders — Horizon Bank, LCU and Pacific Mortgage Group — now have at least one rate below 5.75% on Canstar's database.
Sale said the spread between the RBA's average variable rate of 6.26% and the market's lowest available rate is worth roughly $209 a month in repayments on a $600,000 loan — enough, he said, to "more than cover another rate hike."
Whether the RBA delivers a fourth rate rise this cycle hinges on data due over the next three weeks, with Thursday's labour force figures and next week's June quarter inflation numbers the final inputs before the Board's 11 August decision.
Westpac still has an August hike pencilled in on the way to a projected peak cash rate of 4.85%.
"You cannot control the RBA, but plenty of borrowers could claw back part of the cost of this hiking cycle with one sharp conversation with their lender, or by voting with their feet," Sale said.
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