After moving interest rates to a 53 year low in May, the Reserve Bank of Australia (RBA) has decided to leave rates unchanged at its June meeting.
Earlier today, the board decided that the current monetary policy setting was appropriate for the time being.
But while the RBA has left the official cash rate on hold at 2.75 per cent, Loan Market spokesperson Paul Smith said there is a chance lenders will continue their aggressive rate cuts and move variable interest rates independently of the RBA.
“Cost-of-funding pressures have significantly eased from last year and out-of-cycle rate movements could be the next area of heated competition between lenders,” Mr Smith said.
Mr Smith said the RBA rate cut in May sparked competition with ANZ cutting rates over the RBA rate drop and dethroning NAB with the lowest advertised standard variable rate, a position which it held for four years.
“The main area of competition most consumers aren’t aware of is the rate discounting going on behind the scenes. Small out-of-cycle rate movements are minuscule compared to the lengths some lenders are going to attract certain types of borrowers,” he said.
Mr Smith said that with further interest rate cuts predicted this year, homeowners were likely to see interest rates drop to further historic lows.
“As poor economic data and the Aussie dollar continue to give the RBA scope to lower the cash rate, homeowners should feel confident that they’re going to be saving money on their home loans.”
According LJ Hooker's deputy chair L Janusz Hooker better than expected capital investment outlook, a weaker Australian dollar and increase in building approvals has put further cuts on hold for the current time.
"The Australian residential property is clearly in recovery in many metropolitan areas such as Sydney, Perth and Melbourne which in time will buoy the broader market nationwide,’’ Mr Hooker says.
"Buyers have been spurred into property with not only attractive deals on mortgages but wages are up and home prices are around the bottom of the cycle which has increased affordability.’’