As the Reserve Bank of Australia’s (RBA) upcoming cash rate decision looms, the mortgage market is already abuzz with movement. Macquarie Bank has taken the lead, reducing its fixed rate on selected loans in a move that could spark a wave of competition among lenders.
Effective from January 21, Macquarie Bank has trimmed its one- to three-year fixed-rate mortgages by up to 0.16 percentage points, making its rates among the most attractive in the market. The standout offering? A 5.55% fixed rate (6.05% comparison rate) for owner-occupiers with a loan-to-value ratio (LVR) of 70% or less, available on two- and three-year terms.
This reduction positions Macquarie just shy of the market’s lowest advertised two-year fixed rates, currently led by BankVic and Community First Bank at 5.49%. However, these new rates apply only to new loans formally approved from January 21 onward.
A Strategic Move in a Competitive Market
Macquarie Bank has seen remarkable growth in its mortgage book, up 14% over the year to November 2024, with brokers playing a pivotal role in this expansion. By slashing its fixed rates, the bank not only reinforces its market presence but also anticipates potential changes in the cash rate.
With the RBA’s next decision set for February 18, many lenders, including major players like ANZ and CBA, are expecting the first cash rate cut in over four years. Macquarie’s proactive rate adjustments may encourage other lenders to reevaluate their offerings, intensifying competition in the fixed-rate market.
Expert Insights: Should Borrowers Lock In Rates?
Sally Tindall, data insights director at Canstar, notes that while Macquarie’s rate cuts are modest, they could act as a catalyst for broader market changes. “The prospect of cash rate cuts in the coming months is likely to prompt more lenders to adjust their fixed rates,” Tindall explained.
However, with fixed rates influenced by wholesale funding costs, and many borrowers anticipating variable rate relief, the demand for fixed-rate loans may remain subdued. “Most borrowers are staying variable, hoping to benefit from potential cash rate cuts,” Tindall added. She also cautioned homeowners against assuming a rapid succession of rate reductions, even if an initial cut is expected.
Growing Optimism in the Housing Market
The prospect of lower interest rates has already begun to boost consumer confidence. The Westpac-Melbourne Institute’s “time to buy a dwelling” index saw a 10% rebound in January, reversing December’s decline. This renewed optimism reflects expectations of easing mortgage costs and stabilizing housing prices in major cities.
Westpac’s chief economist, Luci Ellis, highlighted the interplay between rate cut expectations and housing affordability. “The rise in confidence could stem from the belief that mortgage rate decreases are imminent, coupled with a slowdown in housing price growth.”
What’s Next for Borrowers?
For those navigating the mortgage market, staying informed is crucial. Whether you’re considering a fixed rate for stability or leaning toward variable rates for potential savings, understanding the shifting landscape can help you make the right choice. As the RBA’s decision approaches, keep an eye on lender offerings and market trends to maximize your financial benefits.
If you’re wondering whether it’s time to review your mortgage options, we can help. Contact us today to check your rates and explore the best options tailored to your needs. Don’t wait—secure peace of mind and potential savings now!