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The latest wave of mortgage rate cuts has continued, with two new lenders announcing changes ahead of an expected monetary policy adjustment from the RBA.
St George Bank and the Bank of Melbourne are the latest lenders to cut their mortgage rates, following moves from ING, NAB, BOQ, BankSA, and Greater Bank last week.
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The Westpac subsidiaries join BankSA in cutting their fixed rate offerings by up to 25bps, with their changes effective from 31 May.
St George’s changes are as follows:
- A reduction of 6bps for three-year owner-occupied P&I loans
- A reduction of 20bps for three-year investment P&I loans
- A reduction of 25bps for three-year investment interest-only loans
- A reduction of 25bps for three-year portfolio loans
Meanwhile, the Bank of Melbourne has announced the following changes:
- A reduction of 5bps for two-year owner-occupied P&I loans
- A reduction of 6bps for three-year owner-occupied P&I loans
- A reduction of 5bps for two-year investment P&I loans
- A reduction of 20bps for three-year investment P&I loans
- A reduction of 25bps for three-year investment interest-only loans
- A reduction of 25bps for three-year portfolio loans
It is not yet clear whether Westpac will pass on similar reductions to its new customers.
According to Canstar’s finance analyst, Steve Mickenbecker, the rate changes have come in response to easing funding costs and in anticipation of a rate cut from the RBA.
“Wholesale funding costs for lenders have fallen this year, giving lenders margin to invest in new loans, as the jockeying for market share continues,” he said.
“Lenders are getting ahead of the Reserve Bank, aggressively using fixed rate cuts to grow business.”
Mr Mickenbecker added that while fixed-rate reductions don’t alleviate repayment pressures for existing borrowers, an imminent monetary policy adjustment would flow through to variable home loan customers.
“An RBA cut should give existing variable-rate borrowers an opportunity to catch up part of the distance they have fallen off the pace.”
ING is the only lender to announce reductions to its variable mortgage rates during the latest cycle of changes, with the non-major announcing reductions of 16bps across its Orange Advantage and Mortgage Simplifier P&I loans, effective from 30 May
[Related: ‘Aggressive’ rate cut frenzy ensues as sentiment flips]
