Smaller lenders have reduced fixed rates despite predictions of further rate hikes
The mortgage market saw a flurry of activity, primarily driven by reductions in fixed rates, financial comparison website RateCity.com.au has reported.
Despite discussions hinting at potential rate hikes, smaller lending institutions led the charge in lowering their fixed rates, notably the Bank of China, which reduced its rates for owner-occupiers across all terms to 5.79%.
For fixed-rate terms, HSBC has set a competitive one-year fixed rate at 5.79%, which is among the lowest advertised rates. Australian Mutual Bank offers a low two-year fixed rate of 5.63% and a three-year rate at 5.48%.
RACQ Bank also reduced its owner-occupier, variable, and principal and interest loans with loan-to-value ratios (LVR) under 60% by 0.05 percentage points to 5.99%. IMB Bank also reduced rates on its two-year fixed owner-occupier loans for an LVR between 80% and 95% by 0.15 percentage points, aligning it at 5.99%.
Rate hikes were seen at Greater Bank, which increased its owner-occupier, variable, and principal and interest rates by 0.05 percentage points to 5.99%, while Illawarra Credit Union lifted rates on its two-year fixed investment loans by 0.15 percentage points, reaching 6.14%. Southern Cross Credit Union made a substantial adjustment, increasing its three-year fixed owner-occupier principal and interest rate by 0.30 percentage points to 6.29%.
A significant development was Westpac Group’s announcement to terminate its cashback offers through its subsidiaries — St. George, BankSA, and RAMS— effective June 30. Consequently, the number of lenders with active cashback promotions on variable rate loans has dwindled to nine.
“The RBA left rates on hold this week, as widely expected, however, the governor left a number of clues as to where the cash rate might go and when,” said Sally Tindall (pictured), research director at RateCity.com.au.
“Governor Bullock admitted the RBA believes we could be at the cash rate peak, even after the slower than expected progress in inflation. However, the Reserve Bank is understandably not willing to rule out the possibility of another cash rate hike.”
Looking ahead into 2024, Tindall said the chances of reductions in the cash rate seem less likely, with the RBA updating its inflation forecasts, predicting CPI will actually be higher at the end of this year than where it currently sits.
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