Lenders have begun jostling for space as many believe the cash rate target has peaked in the current cycle including NAB. Source: Lisa Maree Williams/Getty Images
One of Australia’s biggest banks has slashed rates weeks out from the Reserve Bank’s crucial August meeting – joining 21 others defying RBA’s warning it will hike if needed.
A massive 21 lenders have slashed fixed rates specifically ahead of the monetary policy decision that’s due on August 11 – four of whom are now sitting under 6 per cent.
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After a massive wave of hikes, lenders are now shifting the other way. Source: Canstar.com.au
The National Australia Bank joined the fray, with up to 0.20 percentage point chops to its short-term fixed home loan rates, according to the Canstar database which now puts the lowest NAB rate at 6.34 per cent for two years.
Canstar tracking shows NAB is going with the tide after weeks of fixed rate cuts from both big and small lenders since 1 June including ANZ and Macquarie.
Canstar.com.au data insights director, Sally Tindall, said the move comes “even though the RBA’s next cash rate decision is still weeks away”.
“The majority of lenders have been moving fixed rates lower since the start of June, suggesting the market believes the cash rate has either peaked or is very close to it,” she said.
“That’s despite the fact the RBA has warned it will fire off more hikes if the data warrants it.”
But Ms Tindall said “while fixed rates are starting to head back down to Earth, they’re still a far cry from being competitive”.
Canstar data insights director Sally Tindall.
Lowest fixed rates in the database. Source: Canstar.com.au
“It’s difficult to see many customers rushing to fix their mortgage with a rate that starts with a ‘6’. ANZ might have the lowest fixed rates out of the majors, but Macquarie is well below them at 6.09 per cent while there are now four different lenders offering a fixed rate under the 6 per cent mark at 5.99 per cent.”
One of the big four has definitely broken away from the pack in its outlook, with Westpac standing firm albeit alone, in its expectation of an August rate hike.
It also expects a further hike after that – potentially in September – despite the others in the big four, CBA, NAB and ANZ, believing the cash rate target has peaked.
“That disconnect highlights just how uncertain the outlook remains,” Ms Tindall said. “Borrowers considering fixing should base their decision on whether they value repayment certainty over flexibility, rather than trying to outguess the RBA.”
Westpac is on its own in its outlook among the big four but all agree next year will see cuts. Source: Canstar.com.au
Markets began pricing in a hike on Monday (22 per cent), though that has mellowed to a 19 per cent expectation of an RBA Increase to 4.60 per cent.
Ms Tindall said there’s “a lot of data still to come between now and when the RBA next meets” including ABS Labour Force figures Thursday and CPI next week.
“It’s fair to say the future of the cash rate, and to an extent, fixed rates will depend on what comes through in the next couple of weeks.”
There is one thing the big four currently all agree on – RBA will be looking at rate cuts next year.
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