After moving interest rates to a historic 53-year low in May, the RBA decided to leave rates unchanged at 2.75% at its June meeting yesterday – but that doesn’t mean lenders have side-lined the possibility of continued independent cuts.
Loan Market spokesperson, Paul Smith, says cost-of-funding pressures have eased from last year and out-of-cycle rate movements could be the next area of ‘heated’ competition between lenders.
“The main area of competition most consumers aren’t aware of is the rate discounting going on behind the scenes. Small out-of-cycle rate movements are minuscule compared to the lengths some lenders are going to attract certain types of borrowers,” says Smith.
“As poor economic data and the Aussie dollar continue to give the RBA scope to lower the cash rate, homeowners should feel confident that they’re going to be saving money on their home loans.”
Mortgage Choice spokesperson, Belinda Williamson, says the RBA’s decision is a sign that things are looking up for the country’s economy.
“Following last month’s cash rate cut, and the culmination of previous cuts, we seem to be witnessing some positive signs in the economy. Indicators of this in the property market include improvements in housing finance commitments, building approvals and auction clearance rates. Plus, we are seeing the unemployment rate remain relatively steady, signs of life in retail sales and a fall in the Australian dollar, which should provide breathing space for many exporters and help lift business confidence,” says Williamson.
“There is likely to be another rate cut at some point this year, but borrowers need not wait for this before making changes, particularly as the beginning of the next financial year, July 1, is less than one month away. Borrowers should take advantage of this point in time and refresh their financial plans.”
This article first appeared on our sister publication Australian Broker Online.