Macquarie slashes variable rates; Police Bank drops fixed rates below 5%
Two Australian lenders have lowered mortgage rates in the lead-up to the Reserve Bank of Australia’s next monetary policy decision, signalling growing competition and shifting expectations in the home loan market.
Macquarie, the country’s fifth largest lender, has reduced its variable interest rates for property investors, marking another move in the lender’s rate-cutting strategy following recent fixed rate reductions.
The bank’s lowest variable investment rate now sits at 5.99% per annum (6.01% comparison rate) for borrowers with a loan-to-value ratio (LVR) of up to 60%. This rate is now only slightly higher than Regional Australia Bank’s offering of 5.81% per annum (5.82% comparison rate), which remains the most competitive variable investment rate on the market.
With less than three weeks until the Reserve Bank of Australia’s (RBA) next cash rate decision, most lenders appear to be in a holding pattern. Market activity has slowed, likely in anticipation of potential monetary policy changes.
The big four banks have all forecast a rate cut when the RBA meets on May 20, though expectations differ on the scale. While NAB has projected a 50 basis point cut, others suggest a more modest 25 basis point reduction is more probable.
Meanwhile, mutual lender Police Bank has made a significant move in the fixed rate space, cutting some of its home loan rates below 5% — a level not seen for new loans in over two years.
The lender, which was formerly known as NSW Police Credit Union, has reduced its three-year fixed rate by as much as 1.15 percentage points. It is now offering a rate of 4.99% per annum for both owner-occupiers and investors making principal and interest repayments.
Police Bank’s two-year fixed option has also been adjusted to 5.15% per annum. Both rates apply to borrowers with LVRs up to 95%.
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