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Despite the RBA’s recent decision to leave the cash rate on hold, some lenders may choose to step out of cycle and cut their rates, according to Mortgage Choice.
Speaking with The Adviser, Mortgage Choice spokesperson Jessica Darnbrough said funding costs have eased and competition is heating up, creating a perfect opportunity for some lenders to move on their rates.
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“Financial commentators are saying lenders' funding costs have eased, so there is the possibility that we may see some lenders move out of step with the RBA and cut their variable rates,” she said.
“Furthermore, competition between Australia’s lenders is currently running very hot. In a bid to generate more business and entice borrowers, many lenders are waiving fees, offering cash-back incentives and sharp pricing.
As such, it wouldn't come as a surprise to see lenders moving their rates independently of the Reserve Bank.”
At the same time, NAB has moved the bank's original prediction of a cash rate cut in November and is now predicting a February 2014 cut.
“Recent RBA statements suggest the central bank is comfortably on hold and we have decided it is more likely that the next easing of policy will be delayed until February,” a statement released by the bank said.
Westpac took a similar line, also declaring the RBA will not move until February.
However, Ms Darnbrough believes the next rate movement will be dependent upon employment data and inflation figures.
“The Reserve Bank of Australia has made it clear that they will adjust policy as needed to foster sustainable growth in demand and keep inflation outcomes consistent with the target,” she said.
“Whether or not the Reserve Bank chooses to keep rates on hold for the foreseeable future depends on a couple of things – namely the latest employment data and the September quarter inflation figures."
Ms Darnbrough said any unexpected movements in either of these areas could force the Reserve Bank to pull the rate lever again in November.
