Macquarie Bank slashes rate of interest to most affordable in Australia as stress warms up on RBA

Macquarie Bank has actually gone down the rates of interest on among its set home loans in an additional significant indicator the Reserve Bank of Australia (RBA) is inching in the direction of a price cut. Australia’s 5th largest financial institution’s two-year home mortgage rates of interest utilized to stand at 5.59 percent yet it’s been reduced to 5.39 percent.

This price just puts on owner-occupied fundings for individuals that can front up a 30 percent down payment yet it’s one of the most affordable in the nation for comparable home loans. The step signs up with a number of various other financial institutions that have actually readjusted their repaired prices and Mozo individual financing professional Rachel Wastell thinks we get on the cusp of a decrease in the main money price.

“GDP figures show a slowing economy, there is also a lack of growth in trend terms in household spending, an increase in mortgage arrears and a drop in job vacancies,” Wastell told Yahoo Finance.

RELATED

“All of these indicators suggest that it is likely the RBA’s next move will be to cut rates, rather than raise them further.

“We can see this reflected in the recent cuts to home loan rates, particularly longer term fixed rates – where banks have the most opportunity to offer comparably low rates now that will most likely end up higher than variable rates during those fixed terms.”

By comparison to the Big Four, Macquarie’s rate is lower than Westpac’s two-year fixed rate of 5.99 per cent, Commonwealth Bank’s 6.29 per cent, NAB’s 6.49 per cent, and ANZ’s 6.54 per cent.

The drop of 20 percentage points for Macquarie customers on the old two-year fixed loan rate will allow them to save an extra $80 per month if they had an average mortgage of $641,000.

But with all eyes on the RBA for potential rate cuts in the early part of next year, many Aussies aren’t keen on fixing their home loans.

Story continues

A poll of more than 2,800 Yahoo Finance readers showed that 67 per cent are worried about having a fixed rate in case it hurts them in a few months.

Watsell said choosing to have a fixed or variable rate is a delicate ” stabilizing act”.

“With the chance of further rate cuts on the horizon, variable rates could very well drop below the lowest fixed rates on offer, so you could be stuck paying a higher rate after the RBA starts the cutting cycle,” she told Yahoo Finance.

Which banks have cut interest rates?

• Bankwest: The bank has cut rates on most of its fixed rate loans by up to 0.5 per cent, with customers offered a 5.89 per cent rate its 2- and 3-year fixed rates for loan-to-value ratios (LVR) of 80 per cent or less.

• ubank: Lowered interest rates on selected fixed rate loans with cuts of up to 0.73 per cent. Borrowers can get a 5.79 per cent rate for two, three and five-year fixed rate terms with an LVR of 80 per cent or less. The bank also cut its flex variable interest rate by up to 0.10 per cent.

• ING: It has cut its fixed rates by up to 0.60 per cent and is offering a 5.84 per cent rate for two, four and five-year fixed rate terms for borrowers with an LVR of 80 per cent or less. The bank also shaved 0.05 per cent off variable rates for borrowers with LVRs between 80 to 90 per cent.

Other banks that cut rates included Bank of Sydney, Gateway Bank, Greater Bank, Heritage Bank, IMB Bank, ME, Newcastle Permanent, People’s Choice, Police Bank, Southern Cross Credit Union and Teachers Mutual Bank.

More interest rates cuts to come

Wastell expects “more rate cuts will be coming through from the banks”, particularly in the fixed rate space.

NAB was the first Big Four bank to cut fixed rates in July, with CBA and Westpac following suit in August.

“As the economy cools and the RBA moves closer to cutting rates, lenders are likely to sharpen their deals to attract borrowers,” Wastell told Yahoo Finance.

“One bank we are keeping our eyes on is ANZ, as they are the only Big Four Bank who has not cut fixed rates since NAB started with its three year fixed rate cut back in July.”

When could the RBA cut interest rates?

That’s the million-dollar question and there are some very different ideas on when that moment will happen.

According to the Big Four, the majority reckon it’ll be at the first RBA meeting of 2025.

• CBA: First cut in December 2024, with 5 cuts to bring cash rate to 3.10 per cent

• Westpac: First cut in February 2025, with 4 cuts to bring cash rate to 3.35 per cent

• NAB: First cut in February 2025, with 5 cuts to bring cash rate to 3.10 per cent

• ANZ: First cut in February 2024, with 3 cuts to bring cash rate to 3.60 per cent

But others aren’t sure mortgage relief will come that soon, with one economist predicting the RBA will cut rates sometime in 2026.

Richard Holden, Professor of Economics at UNSW Business School, told Yahoo Finance homeowners should expect to hold their breath a lot longer.

“We’re not mosting likely to fix this rising cost of living issue by reducing prices. We’re mosting likely to make it even worse,” he stated.

Get the most up to date Yahoo Finance information – follow us on Facebook, LinkedIn and Instagram.