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Average mortgage interest rates have continued to decrease across all categories, but the official rate cycle may not yet have bottomed out, according to one industry analyst.
RateCity banking analyst Peter Arnold expects to see the Reserve Bank of Australia (RBA) make another rate cut in the second half of 2015.
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“With global uncertainty, namely in the markets of Greece and China, combined with early suggestions that APRA’s efforts to rein in lending for the Sydney and Melbourne property markets are starting to work, the RBA should have room to cut further and spur on the rest of the economy,” Mr Arnold said.
He also noted that by APRA cracking down on investor lenders, there has been a range of tweaks to investment product offerings.
“Some lenders have capped LVRs for investors, others have restricted which income is assessed in affordability calculations, and others have removed discounts to investors. We expect more action in this space as lenders carefully balance their desire for growth,” Mr Arnold said.
His prediction comes as part of RateCity’s latest Rates of the Nation report.
According to the report, average variable interest rates were the biggest mover – down 0.23 percentage points to 4.83 per cent over the quarterly survey period. One-year fixed rates dropped by 0.11 per cent to 4.44 per cent, while three-year fixed rates decreased by 0.10 per cent to 4.51 per cent.
Furthermore, five-year fixed rates dropped by 0.04 per cent to 4.71 per cent.
"May saw another RBA cut, on the back of the 18-month drought-breaking cut in February, bringing the official rate down to 2.0 per cent, [taking] the lowest variable home loans to … under 4.0 per cent and one-year fixed rates as low as 3.33 per cent,” Mr Arnold said.
“Home loan rates were not cut to the same extent as they were following the February cut, with some lenders cutting by less than the official 0.25 per cent. Rates down by 0.23 per cent on average through the quarter, a turnaround from Q1, which saw rates decrease by 0.26 per cent.”
RateCity’s report pre-dates recent moves by ANZ, CBA and NAB to increase mortgage rates on investor loans.
[Related: More consumers taking advantage of low rates]
