Australian lenders are getting ahead of the Reserve Bank, with seven cutting fixed home loan rates last week by an average of 0.29%, according to Canstar’s latest data.
“The pre-RBA rate cutting has started a couple of weeks early with seven lenders slicing fixed rates last week,” said Canstar insights director Sally Tindall (pictured). “Australia’s fifth biggest lender – Macquarie Bank – chimed in on Monday with cuts of its own, taking its lowest two-year fixed rate to 4.99%.”
There are now 799 rates below 5.5% on Canstar’s database, up from 764 the previous week. More than two dozen lenders now offer at least one fixed rate under 5%.
“Fixed rates under 5% are no longer a novelty,” Tindall said.
To compare the latest figures with the previous week’s, click here.
In a rare move for the variable market, Police Credit Union broke the 5% barrier, offering a new variable rate of 4.99%.
“Variable rates, however, have been in a different league, that is, until last week when Police Credit Union broke the 5% barrier with a new variable rate of 4.99%,” Tindall said.
She said this sets the pace for future rate moves.
“Now the title has fallen early – the question is – how many banks will follow suit either ahead or following the next RBA rate move,” Tindall said.
Attention is now on this week’s CPI print, which could influence the RBA’s rate cut timing. The central bank is widely expected to cut on Aug. 12, but only if inflation continues to trend down.
“Wednesday’s CPI results will help confirm exactly when the next RBA cut will be,” Tindall said. “Even a single notch, from 2.9% to 2.8%, might be enough to get it moving.”
Westpac is forecasting a 0.9% rise in Q2 CPI and a 0.7% increase in the trimmed mean, lowering the annual pace from 2.9% to 2.7%. According to Westpac senior economist Justin Smirk, this may still leave room for the RBA to cut rates next month.
“We don’t see [0.7%] as enough to prevent the RBA from cutting rates at its August meeting,” Smirk said.
Housing is expected to contribute significantly to Q2 inflation, with electricity prices jumping 9.3% and rents rising 1%. Auto fuel, though up 2.4% in June, is set to drag quarterly CPI with a -3.8% decline.
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