Multiple Aussie banks cut home loan interest rates for borrowers defying RBA hold: ‘Opportunities’

Multiple Aussie banks have cut their home loan interest rates in the last week, with one major lender making a surprise double cut. The moves come despite the Reserve Bank of Australia (RBA) holding the cash rate in June, with expectations rate cuts are off the table for the rest of the year.

A total of 18 lenders have cut their variable home loan interest rates, Canstar analysis revealed. Bendigo Bank was the “standout”, cutting its lowest variable rate for refinancers by 0.15 percentage points, taking it to 5.89 per cent.

Bendigo Bank is now one of 15 lenders offering a rate below 5.90 per cent, however, it still trails behind market leaders who are offering 5.69 per cent.

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“The cut is yet another sign there’s competition in the mortgage market, with the total number of lenders to have lowered new customer variable rates now at 18,” Canstar data insights director Sally Tindall said.

“Competition among lenders continues to create opportunities for some households to cut their borrowing costs. Negotiating with your lender can get you on your way, but the bigger gains still typically come from refinancing.”

Fixed rates are also dropping, with five lenders cutting rates by an average of 0.22 percentage points during the week.

AMP led the cuts, cutting some fixed rates by as much as 0.50 percentage points, or the equivalent of two cash rate cuts.

Loans 30 to 89 days in arrears rose slightly in March following the RBA’s rate hikes, the latest APRA data showed. However, this is just 0.49 per cent of the loan book and is well below average, showing the mortgage market is still resilient.

“Similarly, the value of home loans on interest-only loans rose marginally in the March quarter to 11.8 per cent of all mortgages, also below average — evidence existing borrowers aren’t switching over to interest-only in search of relief from rising rates,” Tindall said.

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RBA rate cuts ruled out until 2027

Economists have all but ruled out another interest rate cut from the RBA until well into 2027, with the prospect of another rate hike still on the table.

A slim majority of the 32 economists polled for The Australian Financial Review’s latest quarterly survey said the cash rate had peaked at 4.35 per cent

HSBC chief economist Paul Bloxham expects an “extended pause” and estimates it will take at least until the middle of next year for the RBA to start easing.

Westpac is the only Big Four bank that is tipping two more interest rate hikes, with the cash rate expected to climb to 4.85 by the end of the year and no cuts until February 2028.

Commonwealth Bank expects the RBA will be on hold for the rest of 2026, but has acknowledged there are risks that further tightening will be required late this year if growth is more resilient and inflation more persistent.

“We expect two rate cuts in 2027, which should help stabilise household spending and the housing market. This should see growth recover into late 2027 and the labour market stabilise,” the bank’s economists said.

NAB expects the RBA to remain on hold before gradually cutting from the second quarter of 2027, while ANZ expects two cuts in 2027.

AMP is expecting a further interest rate hike this year, likely in August, with the RBA expecting to start cutting next year.

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