Powered by MOMENTUM MEDIA
realestatebusiness logo

Subscribe to our newsletter

Mortgage rates drop ahead of RBA move

Home loan rates are on the chopping block, with lenders taking action ahead of four potential cuts to the cash rate. 

ING is the latest lender to drop its home loan rates, announcing cuts of up to 17 basis points across its Orange Advantage and Mortgage Simplifier principal and interest variable home loans, effective from 30 May.

The non-majors rates now start from 3.59 per cent (3.62 per cent comparison rate) for its Mortgage Simplifier product and 3.64 per cent (3.96 per cent comparison rate) for its Orange Advantage loan.

The drop in wholesale funding costs and the expected cuts to the official cash rate from the Reserve Bank of Australia (RBA) have also prompted non-bank lender Mortgage House to fund the launch of a variable owner-occupied home loan with an interest rate of 3.29 per cent (3.34 per cent), offered through digital third-party mortgage platform Uno Home Loans.  

According to rate comparison site Canstar’s finance analyst, Steve Mickenbecker, lenders have sought to capitalise on the shift in sentiment across the market.

Advertisement
Advertisement

“The market is showing promising early signs of recovery – too early for a trend yet – and no lender wants to miss out on its share of the quality loans in market,” he said

RateCity research director Sally Tindall also observed: “With a rate cut very much on the cards, some lenders are getting ahead of the game to try to bring in new business." 

Speaking to Mortgage Business, Uno Home Loans chief innovation officer Vincent Turner said the online brokerage has observed an overall rise in home loan demand over the past few weeks.

“We’ve seen a huge uptick in enquiries, but also people that were in flow have been progressing,” he said.

“Were seeing a surge in both new enquiry, but also people that were in the flows actually taking action to move through [the process].”

On Tuesday, Commonwealth Bank CEO Matt Comyn also noted the shift in sentiment, claiming that in the week following the federal election, the number of mortgage applications received by the major bank hit a six-month high.

Rate cuts from the RBA are expected to further stimulate demand for home loans, with global investment bank JP Morgan the latest to revise its monetary policy outlook to factor in further adjustments. 

In a report released yesterday, JP Morgan predicted four rate cuts from the RBA by mid-2020, which would take the official cash rate to 0.5 per cent.

JP Morgan initially predicted two rate cuts but has revised its expectations in the wake of subdued inflation growth, stagnant labour market conditions and a “deterioration” in the global economy.

In an address to the Economic Society of Australia last week, RBA governor Philip Lowe conceded that the central bank’s board would “consider the case” for a cut to the official cash rate in June.

The RBA board will meet to determine the June cash rate on Tuesday, 4 June.

[Related: Rate expectations driving lift in sentiment]

Mortgage rates drop ahead of RBA move
mortgagebusiness

Latest News

The big four banks continue to dominate the mortgage market with three reporting an increase to their home loan books over May, APRA stats r...

The prudential regulator has revoked Citigroup Pty Limited’s banking licence following the completion of its sale to NAB. ...

The first month of winter was one where value growth continued to freeze, marking Australia’s “sharpest slowdown” in more than three d...

VIEW ALL

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

Do you think the new NSW property tax will help or hinder first home buyers?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.