Lenders act early as central bank expected to cut cash rate in May
More lenders lowered interest rates last week, including three major players, with one delivering a cut double the size of what the Reserve Bank of Australia is widely expected to announce in the coming weeks.
Data from comparison site Canstar showed that eight banks adjusted their fixed rates for new customers, with three also reducing variable rates.
The total number of banks that have cut at least one fixed home loan rate over the past month now stands at 18, including NAB, which announced reductions on April 11.
Bank Australia lowered its Clean Energy Home Loan fixed rate by 20 basis points (bps), now offering 4.94% for a three-year term, the lowest fixed rate listed in Canstar’s database. This offer applies exclusively to customers purchasing or constructing eligible green homes.
Macquarie Bank also implemented a 20bps cut, reclaiming the lowest fixed rate for the broader market at 5.19% for two- and three-year terms; while Aussie Home Loans introduced the largest reduction so far, cutting its fixed rates by 50 basis points.
“We tend to see fixed rate changes ramp up in the lead up to an RBA meeting where there’s a high expectation of a change,” said Sally Tindall (pictured above), data insights director at Canstar. “The possibility of another cash rate cut in May is very much on the cards.
“I don’t see them cutting by 50 basis points though. To double would spread too much alarm and probably send the wrong message.”
Regional Australia Bank also cut its fixed rates for new customers by up to 45bps, although it slightly raised another fixed product by up to 2bps. AMP reduced its variable rates for new borrowers by up to 20 basis points on Tuesday and followed up with fixed rate cuts of up to 30 basis points.
Summerland Bank lowered variable rates by up to 10bps for new customers and made fixed rate cuts of up to 40bps, while Defence Bank reduced its variable offerings by up to 20bps and its fixed rates by up to 30bps. Hume Bank focused solely on fixed rates, lowering them by up to 34bps.
Some lenders, including Bendigo Bank, Adelaide Bank, Timely Home Loans and Qantas Money Home Loans, made minor increases to variable rates for new customers of up to 5bps. Tindall said these lenders may be stepping back slightly from the competition. “They’re just drawing back a little bit out of that competition, which is not very far,” she said.
Tindall suggested the RBA would likely take a cautious approach at its next meeting. “They may end up cutting the cash rate again in May, or perhaps the meeting after in July, but I can’t see them coming out and firing off a double cut,” she said. “One of the biggest pieces in the puzzle will be the inflation data out Wednesday. All bets are off until we see that data.”
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