A South Australia-based lender has continued the trend of fixed mortgage rate reductions that have been spurred by easing funding cost pressures.
HomeStart Finance, which caters its offerings to first home buyers (FHB) based in South Australia, has announced fixed mortgage rate reductions of up to 30 basis points across its product suite, effective from 6 May.
The changes are as follows:
HomeStart is among several lenders that have reduced rates across their fixed rate home loans over the past few months.
According to Steve Mickenbecker, finance analyst at comparison website Canstar, the changes have come off the back of easing funding cost pressures.
“With the significant fall in wholesale funding costs since the start of 2019, lenders have had the opportunity to invest the fattening margin in acquiring new business,” he said.
Lenders also hiked their variable mortgage rates throughout 2018 and earlier this year in response to such cost pressures.
With short-term funding costs also easing, AMP Shane Oliver expects lenders to pass on savings through variable mortgage rate cuts.
However, Mr Oliver conceded that lenders may be waiting for the Reserve Bank of Australia to drop the official cash rate before making their move.
The RBA again chose to hold the cash rate at 1.5 per cent following its latest monetary policy board meeting.
Mr Oliver, who was expecting a cut, has said that he’s noted a cut for June, stating that the central bank may have been hesitant to drop the cash rate during the federal election campaign.
“While the RBA still sees the labour market as being strong, it has further revised down its 2019 growth forecast to 2.75 per cent (from 3 per cent in February and from 3.25 per cent in November) and its underlying inflation forecast to 1.75 per cent for this year (from 2 per cent in February and from 2.25 per cent in November) and to 2 per cent for next year (from 2.25 per cent in February),” he said.
“This reflects weaker than expected data for growth and inflation in recent months”.
He continued: “Our assessment is that unemployment will drift up from here, not dramatically but to around 5.5 per cent by the end of the year. And we continue to see the RBA cutting the cash rate to 1 per cent by year end.
“We have pencilled in a cut for June but concede that the RBA may wait a bit longer given that there is only one month’s worth of jobs data to be released between now and then.”
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