Variable mortgage rates have sunk to as low as 2.89 per cent, with the market continuing to take shape following the RBA’s monetary policy adjustments.
A new analysis from rate comparison site Canstar has provided a snapshot of the mortgage rate environment following the Reserve Bank of Australia’s (RBA) back-to-back monetary policy adjustments, which saw the cash rate fall by a cumulative 50 bps to a new record low of 1 per cent.
According to the central bank, the primary motivation behind the cuts was to stimulate the labour market, with the RBA’s monetary policy board claiming that lower rates would help “support the necessary growth in employment”.
The cuts prompted an immediate response from the mortgage market, with lenders passing on the reductions to their home loan customers, either partly or in full.
Canstar’s analysis has found that as a result of the cuts, the average variable owner-occupied P&I mortgage rate has slipped to 4.05 per cent, with Greater Bank and Reduce Home Loans currently offering the lowest variable rates at 2.89 per cent.
Greater Bank also currently offers the lowest owner-occupied fixed rate, with its one-year fixed rate product priced at 2.79 per cent.
Canstar also found that the average owner-occupied IO loan has dropped to 4.45 per cent, with the lowest rate on offer at 3.29 per cent (Homestar Finance).
Meanwhile, in the investor lending space, the average P&I rate has fallen to 4.48 per cent, with the lowest variable rate on offer at 3.19 per cent (Reduce Home Loans), and the lowest fixed rate at 3.09 per cent (RACQ Bank's three-year fixed rate).
Canstar also reported that the average investment IO mortgage rate has fallen to 4.76 per cent, with the lowest rate on offer at 3.49 per cent (RACQ Bank).
Mortgage rates may not have hit their floor for 2019, with at least one more cash rate adjustment expected before the end of the year.
In minutes released following the central bank’s last monetary policy decision, the RBA noted that it is prepared to adjust interest rates again “if needed” to get closer to full employment and achieve inflation targets.
The RBA’s monetary policy board will next meet on Tuesday, 6 August.
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