Australia’s mortgage rate landscape saw mixed movements last week, with more lenders cutting variable rates even as several began nudging up fixed loans, according to Canstar’s Weekly Rate Wrap-up.
Across the week, six lenders cut 22 owner-occupier and investor variable rates by an average of 0.18%, while another six increased 21 variable rates by around 0.09%.
The average variable rate for owner-occupiers paying principal and interest now sits at 5.93%, while the lowest variable rate on the Canstar database remains 4.99%, offered by G&C Mutual Bank, Horizon Bank, and Unity Bankfor first-home buyers.
For refinancers, Hume Bank also offers a 4.99% locals-only introductory rate, while the lowest broadly available variable rate is 5.08% from in1bank.
There are now 616 home loan rates below 5.25%, up from 593 the prior week.
Fixed-rate changes were more mixed, with two lenders increasing eight fixed rates by an average of 0.24%, while five lenders cut 18 fixed rates by an average of 0.09%.
Sally Tindall (pictured), Canstar’s data insights director, said some of the lowest fixed deals have now disappeared.
“The lowest fixed rate is now off the table with BCU and P&N hiking its one-year rate from 4.65%, up to 4.99% last Friday. As a result, the lowest fixed rate on the Canstar database is now 4.74% for a two- or three-year term from Australian Mutual and a two-year term from Pacific Mortgage Group.”
Tindall said the outlook for fixed rates is changing as economists question how much further the Reserve Bank will go with monetary easing.
“With some economists now forecasting the end of the cutting cycle, there’s a chance we could see more about-turns when it comes to fixed mortgage rates, as banks potentially start to retract the possibility of further fixed rate cuts in their pricing.”
She noted that banks are also weighing weak borrower appetite for fixing.
“Of course, fixed rates are determined by a range of factors including market competition and borrowers’ appetite for fixing, however, with both CBA and Westpac’s full-year results showing just 1% of new loans are opting for a fixed rate, it’s hard to see them making a proper comeback any time soon,” Tindall said.
While fixed loans are losing favour, Tindall said they still offer appeal for borrowers seeking certainty.
“This doesn’t necessarily make fixing a bad proposition, mind you," she said. "The lowest two-year fixed rate on the Canstar database is currently 4.74%, yet the lowest variable rate, available to refinancers is 5.08%. If there’s no more rate cuts for the remainder of this year and next, which is what CBA is currently suggesting, fixing doesn’t seem so crazy after all.”
However, Tindall warned that future movements remain uncertain:
“Of course, with a highly data-dependent RBA there’s no telling what could happen because it ultimately will depend on the data and what we’ve seen in the last few months is that it can track differently to what we expect,” she said.
Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
