People who manage to scrape together mortgage payments or a deposit on a house can take solace in the fact that another of the big four banks is cutting mortgage rates.
Westpac announced on Tuesday that it had reduced the prices of its fixed-rate loans for investment and self-occupied properties with immediate effect.
Getting a fixed interest rate for one year on the house you will live in has dropped from 6.69 percent to 6.19 percent.
If it remains locked in for five years, you will pay 5.99 percent on principal and interest, 0.8 percent less than before.
The cuts to investment property loans are not as substantial, ranging from a 0.45 percent reduction to 6.34 percent for a one-year fixed rate and a 0.70 percent cut for a five-year fixed rate of 6.19 percent.
Data from the Australian Bureau of Statistics shows that the popularity of fixed-rate mortgages peaked in July 2021, when 46 per cent of new and refinanced loans were fixed-rate.
Throughout 2021, the Reserve Bank continued to signal that the cash rate would remain unchanged until 2024.
Former Reserve Bank of Australia governor Philip Lowe later admitted the central bank’s guidance that interest rates would not rise until at least 2024 was an “embarrassing” mistake and that it “should have done better”.
Westpac announced on Tuesday that it had reduced prices for fixed-rate loans for investment and self-occupied properties (pictured, an ATM in Adelaide)
People who manage to scrape together mortgage or deposit payments on a house can take solace in the fact that another of the big four banks is cutting mortgage rates (pictured, buyers at an auction)
Those who took out fixed-rate mortgages saw the RBA raise rates 10 times in a row from May 2022, followed by three more increases over the next eight months as the fixed-term periods on those loans came to an end.
Interest rates now remain at their highest level since November 2011.
However, the Australian stock market is pricing in a rate cut before the end of the year, with NAB the first to do so last month, cutting its three-year fixed rate on home loans by 0.6 per cent to 5.99 per cent.
While minutes from the RBA’s August meeting released this week show the central bank is in no rush to cut rates, the US is on track for a cut next month.
Across the ditch, the Reserve Bank of New Zealand this month cut its official cash rate for the first time in four years, a reversal from its message just three months earlier that rates would remain on hold until mid-2025.