Australia’s big four banks are now divided about the path ahead.
Two of Australia’s biggest banks have cut interest rates in a shock move – with one major lender already predicting the Reserve Bank will follow with cuts of its own next year.
This after lenders spent months heading in the opposite direction, with over 80 banks hiking since January, according to Canstar’s database.
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RBA Governor Michele Bullock is widely expected to hold rates this month. Picture: NewsWire / Christian Gilles
ANZ and Macquarie Bank both moved on Friday, with Macquarie making the more dramatic play, slashing its 3-year fixed rate by 0.50 percentage points to bring it down to 6.09 per cent – which is now the lowest fixed rate among Australia’s five biggest lenders.
They were joined by ANZ Bank with more modest cuts, trimming is 2-year fixed rate by 0.10 percentage points to 6.29 per cent – now its lowest fixed rate.
The cuts break ranks with the other half of the big four banks as well as the wider market – Westpac hiked select fixed rates Thursday, while NAB raised its fixed rates as recently as last Friday.
With the Reserve Bank’s monetary policy meeting for June now just over a week away, borrowers face mixed signals everywhere – with even the big four now firmly divided over the path ahead.
Westpac is tipping two more cash rate hikes this year, while NAB expects one more, ANZ believes the cash rate has already peaked and CBA is already pencilling in two cuts in May and August next year.
More lenders have been hiking since January. Source: Canstar.
Canstar.com.au data insights director Sally Tindall said “ANZ and Macquarie have today shifted gears, cutting fixed home loan rates at a time when the majority of the market is still trending up”.
“While these cuts are modest, they are enough to put Macquarie and ANZ in front of their big bank competitors,” she said.
“For many borrowers, the appeal of fixing isn’t about securing the lowest rate, but instead, locking in certainty. If that’s you, spend time looking for a competitive offer before you lock in, and as always, read the fine print so you’re fully across the limitations of a fixed-rate mortgage.”
Canstar’s database updates on the spot when lenders make moves. Source: Canstar.
According to Canstar, only two lenders now offer a fixed rate under 6 per cent – compared to 83 at the start of the year – while over 40 lenders have at least one variable rate under 6 per cent.
Fixed rates have a long way to fall before they are truly competitive again, with Canstar analysis showing an owner-occupier with a $600,000 loan would be $1,798 worse off after one year by choosing the lowest fixed rate over the lowest variable – assuming rates stay on hold.
Even with one more hike, variable still wins by $679, and it is only if two more hikes land that fixing inches ahead – and only by $314.
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