5.5% Home Loan Rates: Are Lenders Getting Ahead of the RBA?

In anticipation of a potential Reserve Bank of Australia (RBA) rate cut in February, several mortgage lenders have already begun trimming their home loan rates. This week saw significant rate reductions from mutual banks and regional lenders, with some rates dipping as low as 5.5%.

Is an RBA Rate Cut on the Horizon?

The RBA’s upcoming February meeting is generating widespread speculation about a potential 25-basis point cut, which would reduce the cash rate to 4.10%. ANZ has joined Commonwealth Bank in forecasting a February cut, while NAB and Westpac expect the first reduction closer to May.

The RBA’s decision hinges on key economic indicators like unemployment and inflation. December’s unemployment rate rose slightly to 4%, even as the economy added 56,300 jobs, which could complicate the case for an immediate rate cut. However, financial markets are pricing in a 73% likelihood of a February move.

This Week’s Standout Rate Changes

Lenders are getting ahead of the RBA’s decision by offering significant rate cuts. Below is a breakdown of this week’s notable changes:

G&C Mutual Bank G&C Mutual made waves with a two-year fixed rate of 5.50% p.a. (5.56% p.a. comparison rate*). While highly competitive, borrowers should note the fixed-rate clause, which automatically rolls into another fixed period rather than reverting to a variable rate.

The Capricornian The Capricornian slashed its variable rates by 90 basis points. Its No Frills Home Loan now offers:

• 5.89% p.a. (5.94% p.a. comparison rate*) for owner-occupiers with LVRs up to 97% for first home buyers.
• 6.09% p.a. (6.14% p.a. comparison rate*) for investors with a maximum LVR of 90%.

Additionally, fixed rates on the Premium Choice lineup dropped by up to 38 basis points. For owner-occupiers:

• Two-year fixed: 5.59% p.a. (6.60% p.a. comparison rate*).
• Three-year fixed: 6.09% p.a. (6.64% p.a. comparison rate*).

Australian Unity Australian Unity joined the trend with reductions of up to 15 basis points across its variable products. New rates include:

• Kick Starter ≤70% LVR: 6.03% p.a. (6.03% p.a. comparison rate*).
• Health Wealth and Happiness Package ≤70% LVR: 6.04% p.a. (6.39% p.a. comparison rate*), which includes offset features and a $399 annual fee.

Opportunities for Borrowers

With lenders moving aggressively to attract borrowers, now may be the perfect time to lock in a competitive home loan rate. Lower rates, coupled with potential RBA cuts, could provide significant savings for both new borrowers and those looking to refinance.

Take the Next Step with Vantage Loans

Ready to secure a lower mortgage rate or explore refinancing? At Vantage Loans, we simplify the process and connect you with the best home loan solutions tailored to your needs.

Call 1800 595 500, email [email protected], or visit vantagefinancial.com.au to take advantage of these market changes today.