Rising cash rate expectations haven’t stopped a fresh round of home loan discounting as lenders jostle for business.
Canstar’s latest scan of the market has revealed a burst of discounting on both variable and fixed mortgages since the Reserve Bank of Australia’s (RBA) May hike, even as economists debate the likelihood of another move in August.
The comparison site identified 18 lenders that had reduced at least one variable home loan rate in the weeks following the last cash rate rise.
One of the more sizeable moves came from Bendigo Bank, which trimmed the headline rate on its lowest variable product for refinancers by 0.15 percentage points.
That cut brings the rate down to 5.89 per cent, pushing Bendigo into a group of 15 lenders that now advertise at least one variable rate under 5.90 per cent.
At the front of the pack, smaller providers such as LCU and Pacific Mortgage Group are posting variable rates of around 5.69 per cent, with 40 lenders now holding variable rates below 6 per cent.
Canstar averages owner‑occupiers on principal‑and‑interest variable loans to be sitting on about 6.67 per cent.
On a $600,000 mortgage, the group estimates that a further 0.25 percentage point increase in the cash rate in August – in line with Westpac’s current call – would add roughly $92 to monthly repayments.
AMP pushes harder on fixed pricing
The comparison data also pointed to substantial movement in fixed rates.
AMP Bank went further than most, chopping certain fixed terms by up to half a percentage point.
Across the group of five lenders that had lowered fixed rates, the average reduction was 0.22 percentage points, leaving AMP’s move at more than double the pack.
That scale of change effectively amounts to a public wager on the near‑term monetary policy track, with AMP signalling a view that the RBA is more likely to pause than hike when it next meets in August.
Broker says competition heating up between lenders
Flair Finance director Kirsty McKinnon said the out‑of‑cycle changes were now a regular feature of lender conversations, with some banks willing to sharpen pricing even while the future direction of the official cash rate remained uncertain.
Pointing to a recent example, she said that “ING just brought down their basic simplicity product out of cycle, which was brilliant. That’s showing some confidence in the banks as well”.
McKinnon said that the question dominating many client meetings was not just where rates were headed, but how much certainty borrowers wanted around their repayments.
“I think people are just most worried, worried about should they be fixing because our interest rates going up,” she said.
“That’s a lot of the conversation that we’re having now around fixed rates and variable rates. What do you want out of your home loan is more of an important question in my eyes as opposed to should we fix.”
She said that the recent cuts were less about changing funding conditions, but rather lenders attempting to stand out in a crowded market.
“I think it’s more a competitive thing. I think that the ones that are reducing them want to see some more volume. I think that they’re chasing deals and they’re wanting to do more business. From what the BDMs are saying to me,” she said.
[Related: Bendigo flags final 2026 hike as CBA eyes cuts]
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