Little movement in variable mortgage rates after RBA hold

There was little change in the variable rate market following a busy week in the mortgage finance space.

The Reserve Bank of Australia held interest rates at 3.6% on Tuesday, 30 September, as the Monetary Policy Board maintained its cautious stance amid an uncertain economic outlook. The board noted that private demand was recovering “a little more rapidly than expected”, while the housing market showed signs of strengthening following recent interest rate decreases.

The rate hold came as the expanded First Home Guarantee took effect on 1 October, allowing first-home buyers to enter the property market with a 5% deposit. Under the revised scheme, the government guarantees up to 15% of the property’s value, removing the need for lender’s mortgage insurance. The policy also lifted previous income caps and place limits.

Current variable rates

Among the most competitive owner-occupier variable rates with principal and interest repayments at the end of the week included:

• IMB Budget Home Loan: 5.29% (5.32% comparison rate, 20% minimum deposit)
• Westpac Flexi First Option Home Loan: 5.24% (5.25% comparison rate, 30% minimum deposit)
• Community First Bank Go Basic: 5.24% (5.29% comparison rate, 20% minimum deposit)
• Commonwealth Bank Digi: 5.34% (5.47% comparison rate, 40% minimum deposit)
• Macquarie Bank Offset Home Loan: 5.34% (5.60% comparison rate, 30% minimum deposit)
• ANZ Plus Home Loan: 5.50% (5.51% comparison rate, 20% minimum deposit)

Discussing the RBA hold, Shane Oliver, chief economist at AMP Bank, said there remained an “easing bias” among the board, although this bias had been “substantially watered down” since August.

Anja Pannek, chief executive of the Mortgage and Finance Association of Australia, said Australian borrowers would have welcomed a cut to interest rates without doubt, but their overall financial outlook had already improved following three rate cuts in July. Brokers reported refinancing conditions were more favourable than they had been in several years, she said.