Mortgage rates fall across all categories

Five-year fixed rates decreased by 0.04 per cent to 4.69 per cent, while one-year fixed rates dropped by 0.02 per cent to 4.34 per cent.

The average variable interest rate declined by 0.03 per cent to 4.74 per cent.

Sally Tindall, money commentator at RateCity, said the Reserve Bank continued its flat line at 2 per cent this quarter, despite speculation of a rate cut before the year was out.

“Despite this, home loan rates have gone both up and down in the space of three months,” she said.

“The major banks all chose to hike rates by an average of 0.18 percentage points on the back of APRA’s requirement that they hold more capital while competition at the bottom of the market sharpened with around 25 lenders choosing to cut their lowest variable rates to as little as 3.65 per cent.

“Unsurprisingly, existing mortgage holders primarily missed out on this news as the majority of these cuts were for new customers only.”

Ms Tindall said the most noteworthy change occurred in investor borrowing where there was a $2.1 billion decrease in lending figures over just four months.

“The falls came on the back of the introduction of higher home loan rates for investors of up to 1.44 percentage points, with around half of the market adopting this two-tiered pricing structure,” she said.

“The overall lending figures were also down this quarter, which is another sign the market is decelerating.”

Ms Tindall expects lenders to continue to “tweak” their home loan products in the year ahead “in an attempt to reduce risk and control investor growth including a continued tightening of LVR requirements”.

“Differential pricing is also expected to continue to put the squeeze on investors however it’s unlikely such sustained declines will continue,” she concluded.

[Related: Mortgage Choice smashes settlement record]