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Macquarie Bank has reduced its one- to three-year fixed-rate mortgages by up to 0.16 percentage points, as lenders prepare for potential rate cuts in the coming weeks.
Australia’s fifth-largest lender has dropped interest rates on some of its fixed-rate loans, bringing its rates to some of the lowest in market.
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The bank’s lowest fixed rate is now 5.55 per cent (6.05 per cent comparison rate), available for owner-occupiers on both two-year and three-year fixed rates when paying principal and interest with a loan-to-value ratio (LVR) of 70 per cent or less.
By comparison, the lowest two-year fixed-rate advertised in market at the moment is from BankVic and Community First Bank (at 5.49 per cent).
The new rates are for new business only and are effective for loans formally approved on or after 21 January.
In a broker update, the bank said: “In today’s market, many Australians want peace of mind when it comes to their home loan. So we’re pleased to share that from Tuesday 21 January 2025, we’re lowering some of our fixed rates.”
The move comes as Macquarie continues to dominate in mortgage lending, having grown its mortgage book by 14 per cent over the year to November 2024. The vast majority of this growth comes from the broker channel.
Its out-of-cycle fixed-rate reduction comes four weeks ahead of the Reserve Bank of Australia’s next cash rate decision (set to be announced on 18 February), at which some lenders – including major banks ANZ and CBA – expect the cash rate to drop for the first time in more than four years.
Speaking of the change, the data insights director of financial comparison website Canstar, Sally Tindall, said while Macquarie Bank’s cuts are minor, they could drive competition in the lender market.
“While fixed rates often reflect the cost of wholesale funding, the prospect of cash rate cuts in the next few months is likely to encourage more lenders to take the knife to their fixed rates,” Tindall said.
“The fixed rate market has been relatively quiet over the summer break, with more lenders hiking these rates in the month of December than cutting. However, this move from Macquarie could push other lenders into taking a look at the competitiveness of their fixed rates in the lead up to the RBA’s next meeting.
“While Macquarie Bank’s new lowest fixed rate of 5.55 per cent is highly competitive when stacked up against the rest of the pack, it’s unlikely to push many borrowers into fixing now cash rate cuts are now firmly on the radar.
“Right now, the majority of borrowers are opting to stay on a variable rate, most likely in the hope we’ll see a flurry of cash rate cuts that will deliver relief in the months ahead.
“If you’ve got a mortgage, don’t bank on there being a multitude of cuts in quick succession. While at least one cash rate cut this year is highly likely, not even the RBA knows exactly how many there will be.”
There are growing expectations that the cash rate will fall at least once this year, leading to buoyed consumer sentiment towards housing.
The Westpac-Melbourne Institute’s ‘time to buy a dwelling’ index rebounded by just over 10 per cent in January, to 89.9, more than reversing the fall recorded in December and signalling growing confidence among home buyers.
Westpac chief economist Luci Ellis said: “The increase could reflect a combination of the growing view that mortgage rate decreases are coming, and a recognition that housing prices have slowed or even fallen in most population centres.”
[Related: Expected rate cuts lift housing sentiment]
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