Financial markets see a 73% chance the RBA will cut the cash rate, partly due to lower core inflation in November.
Macquarie Bank has announced it will reduce its one-to-three-year fixed mortgage rates by up to 0.16%, just weeks before the Reserve Bank of Australia (RBA) makes its first interest rate decision of the year.
The RBA will hold its meeting on Feb. 18 to decide on the cash rate, News.com reported.
Macquarie, Australia’s fifth-largest lender, will now offer a one-year fixed rate of 5.55% for owner-occupiers paying principal and interest, provided they have at least a 30% deposit. For those with a smaller deposit, the one-year fixed rate will be 5.69%. The bank has also reduced its two- and three-year fixed rates by 0.14%, reducing to 5.55%.
While Macquarie’s rates are not the lowest available, they are more competitive than those of the big four banks. They now sit just behind Easy Street, Bank Victoria, and Community First Bank, which all offer two-year fixed rates of 5.49%.
Financial comparison site Canstar notes that Macquarie’s rate cuts could prompt responses from larger lenders.
“Today’s cuts from Macquarie Bank might be relatively minor but they could fire up competition in the fixed rate market as we edge closer to a cash rate cut,” Canstar data insights director Sally Tindall said.
As for the RBA, there is no clear consensus on whether Governor Michele Bullock and her board will reduce the cash rate for the first time since November 2020. However, economists are increasingly confident that a rate cut is likely, reported 9News.com.
“Right now, the majority of borrowers are opting to stay on a variable rate, most likely in the hope we’ll see a flurry of cash rate cuts that will deliver relief in the months ahead,” Tindall pointed out.
Financial markets see a 73% chance the RBA will cut the cash rate, partly due to lower core inflation in November, despite strong jobs data for December.
The chance of a rate cut will be clearer next Wednesday when the RBA gets key December inflation data, which is expected to influence its decision.
