Mortgage rate movements were relatively modest last week as lenders held off major changes in line with the Reserve Bank’s (RBA) decision to keep the cash rate steady at 3.85%.
However, select rate tweaks across investor and owner occupier products hint at increasing competition – especially ahead of critical economic updates.
Minor rate changes across lenders
According to Canstar, a mix of fixed and variable rates shifted slightly:
“The mortgage market remained largely on hold last week with just a handful of lenders tweaking fixed and variable rates, reflecting the RBA’s decision to keep the cash rate at 3.85%,” said Sally Tindall (pictured), Canstar’s data insights director.
To compare the latest rate adjustments with the previous week’s, read this article.
The average variable rate for owner occupiers paying principal and interest currently sits at 6.23%. However, several competitive products remain:
Canstar’s database now includes 764 rates below 5.5%, up from 759 the previous week.
Tindall said lender hesitation reflects broader anticipation of the RBA’s July meeting minutes, which are set to be released today. These minutes may reveal how close the central bank came to cutting rates at its last meeting.
“The minutes from the RBA’s July board meeting will be released today, offering more insight into the central bank’s decision to hold two weeks' ago,” she said.
“While many will look to better understand how close the bank came to cutting the cash rate at the last meeting, the case for a cut at the next one on 12 August has already been consolidated by the surprise jump in Australia’s unemployment rate from 4.1% to 4.3%.”
Tindall added that the next major indicator will come next Wednesday.
“Next Wednesday is another key date to watch, with the release of the June quarterly inflation results from the ABS,” she said.
“While Governor Bullock has said no one inflation figure will trigger a cash rate cut, if core inflation clocks in below the previous quarterly result of 2.9% and key indicators such as service inflation continue to trend down, then it’s likely to be game on – provided most of the other economic and international data doesn’t contradict a cut.”
While mortgage rates have mostly held steady, banks continue to adjust other product lines – most notably savings rates.
“Mortgage rates might be on hold, however, that hasn’t stopped some banks from shaving select savings rates,” Tindall said. “The most recent bank to do this was ANZ, which last Friday cut its Progress Saver rate down by 0.1 percentage points to a new maximum rate of 3.4%.”
Tindall noted the broader implications of the move.
“This move might not be sizeable, but it is significant, as it serves as yet another reminder that banks can and do move out of cycle with the RBA, often at the expense of long-suffering loyal savings customers,” she said.
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