The Reserve Bank of Australia has provided an analysis of pricing and policy changes in the Australian mortgage market in its latest update.
Released Friday, the RBA’s Statement on Monetary Policy identified that average advertised standard variable mortgage rates for owner-occupiers are now 30 basis points lower than they were a year ago.
“There has been an increase in the dispersion of housing interest rates across lenders over recent months, with the major banks raising housing interest rates by more than the mid-size lenders and smaller lenders,” the RBA said.
“In the second half of 2015, most lenders increased their standard variable housing interest rates by 15 to 20 basis points, after raising rates for housing investors in the middle of the year.
“These increases lifted average outstanding housing interest rates by nearly 20 basis points.”
The RBA noted that lenders have not raised their advertised fixed rates to the same extent as standard variable housing rates, with fixed rates around 40 and 60 basis points lower over the year for investors and owner-occupiers respectively.
“Consistent with this, a higher share of mortgages has been taken out with fixed interest rates,” it said.
In response to lower housing interest rates over recent years, the RBA noted that borrowers have had the opportunity to either reduce the principal on their loan by making additional payments above what is required, or to reduce their loan repayments in line with reductions in the required repayment and use the cash for other purposes.
“Household survey data indicate that the share of households ahead on their mortgage repayments has increased over recent years for both owner-occupiers and investors to its highest level since the early 2000s,” it said.
“These excess repayments form a buffer for households in the event that housing interest rates increase, as they did in the second half of 2015.”