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Cash rate relevance waning: Mortgage Choice

susan mitchell mortgagechoice ta susan mitchell mortgagechoice ta
Reporter 6 minute read

The Reserve Bank’s monetary policy decisions have lost significance amid out-of-cycle interest rate changes from lenders, according to Mortgage Choice CEO Susan Mitchell.

On Tuesday (5 March) the board of the Reserve Bank of Australia (RBA) decided to hold the official cash rate at a record-low of 1.5 per cent, following its monthly monetary policy meeting.

It has been two and a half years (August 2016) since the RBA last made a monetary policy adjustment.

However, Mortgage Choice CEO Susan Mitchell has noted that cash rate inertia has not stopped lenders from lifting their mortgage rates.


Throughout 2018, several lenders, including ANZ, the Commonwealth Bank of Australia, and Westpac, announced out-of-cycle mortgage rate increases in response to the sustained rise in wholesale funding costs.

Since the start of 2019, a second-wave of out-of-cycle mortgage rate increases has seen the likes of MyStateNAB and its subsidiary UBankMacquarie, the Bank of QueenslandVirgin Money, and ING reprise their mortgage books, with the lenders also citing funding costs pressures.

Ms Mitchell observed: “In recent years we have seen the relationship between lenders’ pricing on home loans and the official cash rate become less aligned.

“Where borrowers are concerned, it is no longer reasonable to assume that changes in the cash rate, or lack thereof, will drive home loan interest rates.”

Making reference to RBA governor Philip Lowe’s appearance before the House of Representative standing committee on economics last month, the brokerage CEO echoed his view that borrowers should actively seek better deals on their home loan to ease the burden of out-of-cycle rate hikes.


Ms Mitchell noted the value of mortgage brokers in securing a loan that’s in the best interests of borrowers.

“In this increasingly complex environment, it’s no surprise that more Australians are turning to their local home loan experts who can offer them choice and save them money and time,” she said.

“In the September 2018 quarter, broker market share surged, with 59.1 per cent of loans originating through the broker channel, highlighting the value mortgage brokers bring to borrowers.”

Ms Mitchell encouraged borrowers not to pin their mortgage rate expectations on movements in the cash rate, despite the RBA’s recent concession that the next cash rate adjustment could be a cut.

“Whether the cash rate changes or not, the reality is we are living in times of unprecedented change in the lending landscape,” Ms Mitchell said.

“Borrowers should keep a home loan expert in their corner, who is prepared to fight for them to secure a competitive deal on their mortgage.”

[Related: RBA announces cash rate decision]

Cash rate relevance waning: Mortgage Choice
susan mitchell mortgagechoice ta
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