Rate adjustment signals potential for increased lender competition
Macquarie Bank, Australia’s fifth-largest lender, has reduced its fixed mortgage rates for one- to three-year terms by up to 0.16 percentage points.
According to data from rate-tracking firm Canstar, the bank’s lowest fixed rate now sits at 5.55%, available to owner-occupiers paying principal and interest with a deposit of at least 30%.
The move places Macquarie Bank among the more competitive lenders in the fixed rate space and comes four weeks ahead of the Reserve Bank of Australia’s next cash rate decision, scheduled for Feb. 18.
The latest adjustments bring Macquarie Bank’s two-year fixed rate of 5.55% within 0.06 percentage points of the lowest two-year fixed rate in Canstar’s database, currently at 5.49%. The bank’s one-year fixed rate of 5.69% undercuts the lowest equivalent rate offered by any of the big four banks, with Westpac’s one-year fixed rate standing at 6.09%.
Sally Tindall (pictured above), data insights director at Canstar, noted that while the changes from Macquarie Bank may seem modest, they could ignite competition among lenders.
“The cuts from Macquarie Bank might be relatively minor but they could fire up competition in the fixed rate market as we edge closer to a cash rate cut,” she said.
Tindall said that fixed rates are often tied to wholesale funding costs, but the expectation of cash rate cuts in the coming months could prompt more lenders to lower their rates.
“The fixed rate market has been relatively quiet over the summer break, with more lenders hiking these rates in the month of December than cutting,” she said. “However, this move from Macquarie could push other lenders into taking a look at the competitiveness of their fixed rates in the lead up to the RBA’s next meeting.”
Despite the competitive pricing, Tindall said borrowers might hesitate to lock in a fixed rate with the potential for cash rate cuts on the horizon.
“Right now, the majority of borrowers are opting to stay on a variable rate, most likely in the hope we’ll see a flurry of cash rate cuts that will deliver relief in the months ahead,” she said, while also warning homeowners against expecting rapid cuts.
“While at least one cash rate cut this year is highly likely, not even the RBA knows exactly how many there will be.”
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