Lenders signal peak cash rate with few rate changes

Rate adjustments seen as "fine-tuning," not market trend

Lenders signal peak cash rate with few rate changes


By Mina Martin

In this week’s mortgage market update, Canstar reported few interest rate movements among Australian lenders, reflecting a cautious optimism that the peak in cash rates may have been reached.

Lender rate adjustments

Over the March 25 to April 2 week, two lenders, Bank First and Bank of China, raised their owner-occupier and investor variable rates by an average of 0.25%. In contrast, Bank First has reduced three investor variable rates by an average of 0.2%. Meanwhile, The Mac has decreased two owner-occupier and investor fixed rates by a significant average of 0.80%.

Current market rates

Following last week’s rate adjustments, the average variable interest rate for owner-occupiers paying principal and interest stands at 6.9% for an 80% LVR, with the lowest rate at 5.74% for any LVR offered by Regional Bank Australia as an introductory rate.

Canstar’s database now lists 20 rates below 5.75%, a slight decrease from 22 the week prior. Notable lenders in this bracket include Australian Mutual Bank, Horizon Bank, HSBC, and others.

See table below for the lowest variable rates available on the Canstar database.

Insights from Canstar’s Steve Mickenbecker

Steve Mickenbecker (pictured above), Canstar's finance expert, provided context to these movements.

“Only a handful of lenders adjusted interest rates in the last month, reflecting a growing belief that the cash rate has peaked but that a downward move is still quite a way off,” Mickenbecker said, interpreting the latest interest rate movements as “fine-tuning by a few banks and not a trend.”

He cited the Reserve Bank board meeting minutes, which suggested an expectation of demand returning to balance with supply, potentially easing inflation pressures.

“The Reserve Bank is ruling nothing out, noting that the path of disinflation had not been smooth in other countries,” Mickenbecker said.

Mickenbecker also noted the stagnant growth in refinancing over the past 12 months, describing it as “quite inexplicable,” especially given the significant number of home loan interest rates below 5.75% presenting opportunities for savings.

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