Speculation of an upcoming rate hike comes on the heels of the Reserve Bank of Australia's (RBA) June meeting, where the board discussed lifting the cash rate, as revealed in the meeting's minutes released this week.
Ultimately, the decision was to hold the rate steady.
The RBA's most recent meeting pre-dated the upside surprise that was the May inflation data and this week's retail trade figures, which showed consumers spent more than expected in May amid early end of financial year sales.
All this has economists on alert, with some beginning to discuss the possibility of an August rate hike.
There was good news for homeowners, however, as it was revealed Australia's median property price soared $59,000 over the financial year just been.
At the same time, two home loan lenders made variable mortgage rate cuts in the week just been, with BOQ's Me Bank and Bank Australia sweetening their offers for first home buyers and those with smaller deposits.
Let's dive into the latest market movements.
ME Bank slashes variable rates by up to 93 basis points
Bank of Queensland-owned ME Bank has reduced several of its variable rate offerings by nearly a full percentage point.
Borrowers with smaller deposits and less equity stand to benefit the most:
- The Basic Home Loan rate dropped by 85 basis points to 6.39% p.a. (6.42% p.a. comparison rate*) for owner-occupiers with loan-to-value ratios (LVRs) of between 80% and 90%
- The Flexible Home Loan Member Package rate was cut by 93 basis points to 6.49% p.a. (6.87% p.a. comparison rate*) for LVRs between 80% and 90%
The package offers borrowers an offset account and the option to fix their interest rate.
ME Bank also hiked many of its fixed home loan interest rates by up to 20 basis points this week.
Bank Australia rolls out deal for first home buyers
In another win for buyers just starting out with a modest deposit, Bank Australia has put forward an offer for first home buyers.
The mutual bank's Basic Home Loan now advertises a 6.09% p.a. interest rate (6.14% p.a. comparison rate*) for first home buyers with LVRs of as high as 90%.
It will also waive the $595 establishment fee otherwise charged.
The deal is on offer for those applying on or after 4 July 2024 who have loans funded before 31 December 2024.
Hume Bank hikes variable rates by up to 25 basis points
But alongside the variable rate drops, there were also hikes.
Customer-owned Hume Bank lifted many of its variable rates by as much as 25 basis points for both owner-occupiers and investors this week.
Changes for owner-occupiers making principal and interest repayments included:
|
Product |
LVR |
Change |
New rate (p.a.) |
Comparison rate* (p.a.) |
|
liteBlue |
≤60% |
20bp |
6.14% |
6.15% |
|
liteBlue |
60-80% |
25bp |
6.24% |
6.25% |
|
liteBlue |
80-90% |
20bp |
6.49% |
6.50% |
|
liteBlue |
90-95% |
10bp |
6.99% |
7.00% |
While investors making principal and interest repayments might find these changes interesting:
|
Product |
LVR |
Change |
New rate (p.a.) |
Comparison rate* (p.a.) |
|
liteBlue Investment |
≤60% |
15bp |
6.29% |
6.30% |
|
liteBlue Investment |
60-80% |
15bp |
6.39% |
6.40% |
|
liteBlue Investment |
80-90% |
15bp |
6.79% |
6.80% |
Other home loan rate movements
And that wasn't all that happened in the home loan market this week.
Here are some other changes that occurred:
- Beyond Bank dropped fixed rates by up to 0.35%
- Bank of China hiked various variable and fixed rates by 0.20%
- Police Credit Union made changes to its fixed rates, with shifts of up to 0.20%
Image by Arcwind on Unsplash
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