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News.com.au
10-05-2025
- Business
- News.com.au
‘Psychological: Banks slash interest rates out of cycle with RBA cash rate calls
Australian mortgage holders could benefit from cheaper rates, as competition between the banks sees rates fall below a key psychological barrier. ANZ has become the latest bank to make a move on interest rates outside of the RBA's cycle, reducing its fixed rate offering to 5.39 per cent for two years. Friday's sweeping cuts by ANZ mean the bank now offers the lowest one and two-year fixed rates among the big four banks, while NAB has the lowest three, four and five-year fixed rates, after cutting on April 11. These fixed rates are for owner-occupiers paying principal and interest. But in a huge coup for mortgage holders, BOQ and Police Bank both announced new fixed rates at 4.99 per cent breaking through the 5 per cent barrier. Canstar data insights director Sally Tindall while a rate of 5.39 per cent isn't likely to turn many heads, with variable borrowers across the country hanging out for further cash rate cuts, a fixed rate of 4.99 per cent might grab attention. 'A mortgage rate starting with a '4' is a crucial threshold psychologically that could prompt some borrowers to give up their seat on the variable rate rollercoaster. However, by doing so they would be giving up the potential for further cuts in the fixed-rate term,' she said. 'If you are weighing up the option of fixed versus variable, understand what might suit your finances better and make sure you spend time shopping around for a competitive deal.' Ms Tindall said ultimately, this rate slashing is good news for borrowers. 'Two of the big four banks have cut fixed rates within a month of each other and we expect more banks to follow suit, however, lenders will probably have to consider fixed rates in the '4's if they want to get traction,' she said. The move from the financial institutions comes despite the Reserve Bank of Australia holding the official cash rate at 4.1 per cent after April's meeting. The Reserve Bank is widely predicted to cut interest rates by 25 basis points, to 3.85 per cent after they meet on May 19- 20. It comes days after Australia's largest mortgage lender, CBA, made its move on variable interest rate loans to new customers. Wednesday's move by the major bank will see it lower its owner-occupier, principle and interest variable rate loans to 5.84 per cent, in line with Westpac and ANZ. The new home loan rate comes with a few caveats, including it being a digital-only home loan, a 40 per cent deposit and it will only apply to new customers, with existing mortgage holders missing out unless they refinance. Despite the cheaper rates only applying to new customers, Canstar data insights director Sally Tindall described the new rates as 'fantastic' news for mortgage holders. 'This move is fantastic for competition because when Australia's biggest bank cuts its home loan rates it forces other lenders to sit up and take stock of their own,' she said. 'While this new lowest rate from CBA of 5.84 per cent is only for new customers with a 40 per cent deposit, it does not stop existing CBA customers from using this offer as a bargaining chip for their own rate negotiations.'
News.com.au
09-05-2025
- Business
- News.com.au
Banks in rate cut war to woo borrowers ahead of RBA meeting
Another big four bank has taken the axe to its fixed rate home loans, cutting by up to nearly half per cent just 11 days out from the next RBA meeting. In a bid to woo borrowers, ANZ has slashed fixed rates by up to 0.4 percentage points for owner-occupiers, and up to 0.45 percentage points for investors. That takes the bank's lowest fixed rate to 5.39 per cent — the lowest two-year fixed rate of the big four banks. NAB has the lowest three, four, and five-year fixed rates, after cutting a month ago. BOQ and Police Bank have the lowest fixed rates on the market at 4.99 per cent. It follows in the footsteps of NAB reducing its fixed rate on April 11 and Macquarie Bank on April 24. The RBA is widely expected to cut the official cash rate by as much as 50 basis points when it meets again on May 20. State's 15 'supercharged' investor markets revealed data insights director Sally Tindall said the fixed rate mortgage market was finally heating up, with a number of cuts in the past month from big and smaller lenders. 'The bank has one eye on the possibility of cash rate cuts, potentially as soon as 20 May, and another on locking new customers in, using a relatively competitive fixed rate as the hook,' Ms Tindall said. 'While a rate of 5.39 per cent isn't likely to turn many heads, with variable borrowers across the country hanging out for further cash rate cuts, a fixed rate of 4.99 per cent might grab attention.' But it's not just fixed rates that are being cut. The Commonwealth Bank this week dropped its digital variable interest rate to 5.84 per cent — on par with Westpac and ANZ, with only NAB having 6.19 per cent as its lowest. Ms Tindall said a mortgage rate starting with a '4' was a crucial threshold psychologically that could prompt some borrowers to change from a variable rate. 'If you are weighing up the option of fixed versus variable, understand what might suit your finances better and make sure you spend time shopping around for a competitive deal,' she said 'Ultimately, this rate slashing is good news for borrowers. Two of the big four banks have cut fixed rates within a month of each other and we expect more banks to follow suit, however, lenders will probably have to consider fixed rates in the '4's if they want to get traction.' Deloitte Access Economics head Pradeep Philip said the latest inflation data for the March quarter left the door open for the RBA to cut rates this month. 'A May rate cut should not be viewed as the RBA declaring 'mission accomplished' in the fight against inflation,' Mr Philip said. 'Instead, it should be viewed as insurance against any collateral damage a trade war and geopolitical turbulence may cause the Australian economy.' Deloitte Access Economics is forecasting a 50 basis point cut on May 20 followed by another 25 basis point cut this year, which would see the cash rate reduced by 100 basis points including the February cut. Compare the Market economic director David Koch said another rate cut on May 20 would be 'much-needed relief for homeowners buckling under the pressure of expensive loans and high interest rates'. Mr Koch said it was unlikely interest rates would ever be as low as they were during the pandemic, but they should not be as high as they were now. 'Australian homeowners have worn the brunt of the war against inflation,' he said. 'It's high time we had some relief.'
Reuters
17-04-2025
- Business
- Reuters
Bank of Queensland hits over 2-year high as Citi, MS optimistic after strong results
April 17 (Reuters) - Shares of Bank of Queensland (BOQ) ( opens new tab surged to a more than two-year high on Thursday, as analysts at Citi and Morgan Stanley bet on the stock after the lender's strong half-year results. The Australian bank's shares rose as much as 4.5% to A$7.170, hitting their highest level since February 15, 2023, and were last up about 3.4%. The stock is on track to log its third consecutive session of gains, if the trend holds. The Reuters Tariff Watch newsletter is your daily guide to the latest global trade and tariff news. Sign up here. Advertisement · Scroll to continue Report This Ad The bank reported a 13% rise in its half-year statutory net profit after tax (NPAT) on Wednesday, buoyed by improved margins, lower costs and subdued credit losses. Cash earnings were up 6% during the reported period, reaching A$183 million ($116.39 million), about 10-11% ahead of Citi's estimates. Analysts at Citi said the growth in earnings was attributable to BOQ's strong management of the balance sheet to run down mortgages, liquid assets and wholesale funding. They added that the bank pivoting towards high-margin lending business protected it from asset and liability side pressures. Citi expects these benefits to persist into the second half of the year. However, despite being largely upbeat on the stock, Citi flagged potential headwinds from interest rates and competition going ahead. Analysts at Morgan Stanley, too, were upbeat on BOQ's ahead-of-consensus half-year results, and said a low loan loss boosted earnings. The bank reported a net interest margin of 1.57%, which was flat year on year. Morgan Stanley said the margin was broadly in line with expectations, and was supported by lending and deposit mix benefits. ($1 = 1.5723 Australian dollars)
