More than 10 lenders have cut fixed interest rates in the past 10 days, with ING moving to slash its offerings ahead of the Reserve Bank’s next interest rate decision.
The bank has trimmed its fixed rates for new customers by as much as 0.25 per cent, lowering its best fixed rate to 5.34 per cent for longer-term loans.
Several other lenders have cut fixed rates to entice new customers and shore up their portfolios, although Canstar’s money expert Effie Zahos warned rates could actually start dropping by the end of the year.
“Given the average variable rate is 6.14 per cent it’s easy to see that these fixed rates may look very appealing as they are a fair bit lower,” Ms Zahos said.
“It could mean a quick saving windfall – but take care because what may look like a great rate now may not be as good in 12 months’ time, with some banks forecasting that the RBA may start to reduce the cash rate as soon as this year.”
The RBA could keep interest rates on hold when the board meets on Tuesday, which would follow 10 consecutive interest rate hikes.
Both a pause and another hike remain on the table but weaker-than-expected monthly inflation figures released on Wednesday have added fuel to the hold case.
While successive interest rate rises are weighing heavily on mortgage holders, Australian Banking Association chief executive officer Anna Bligh said there had not yet been a significant uptick in borrower hardship.
“The 90-day default rate has not really moved… and banks are keeping a very close eye, are being very proactive and ringing customers that look like they might be in trouble,” she told Sky News.
Ms Bligh said there was a three-month lag between cash rate decisions and customers feeling their effect, meaning the December, February and March increases were yet to hit variable-rate borrowers.
“There’s still three to come and then potentially a prolonged period where people are paying at their peak,” she said.
In further signs of an economy starting to lose steam, job vacancies as measured by the Australian Bureau of Statistics fell for the third quarter in a row.
With 439,000 open jobs on the market, vacancies remained high by historical standards but sunk one per cent between November and February.
ABS head of labour statistics Bjorn Jarvis said vacancies were down by nine per cent from their peak in May last year but were still almost double pre-pandemic levels.
“There is still a very high demand for labour from employers across Australia and across all industries,” he said.
– AAP
