Mortgage broker network 1300HomeLoan says even if the Reserve Bank had cut rates yesterday, it would have had little material significance to mortgage holders as banks continue to increase their variable rates.
1300HomeLoan managing director John Kolenda said the major banks and other lenders have been increasing variable interest rates by up to 20 basis points in recent weeks due to additional compliance and provisioning costs.
Mr Kolenda said while the RBA‘s Cup Day cash rate call was to leave official rates at a record low of 2.0 per cent, a decision by the central bank to further lower rates may not have had much significance for many mortgage holders.
“The RBA’s decisions have rapidly become redundant in the current lending environment,” he said.
“Westpac was the first to raise rates out of cycle and other lenders have followed suit with more increases likely in the months ahead.
“Any future RBA cuts are likely to be negated by the actions of the banks which are adhering to the new regulatory requirements that will increase the cost of providing mortgages.”
Mr Kolenda said ant future rate cuts from the central bank may not be passed on in full by lenders and we may see increases in rates across the board due to potentially increased funding costs and pressure on the major banks to meet the APRA requirements by mid-2016.
Banks might also face additional funding costs due to the issues and economic challenges faced globally, he said.
Meanwhile, Domain Group senior economist Dr Andrew Wilson said the prospects are increasing for a near-term rate cut.
“Growing concerns over the level of local economic growth and sharply diminishing activity in housing markets will likely however keep the Reserve Bank focused on the possible need for further stimulus through additional cuts to interest rates,” he said.