Borrowers could save hundreds per month as experts tip up to four RBA interest rate cuts this year

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Borrowers could save hundreds per month as experts tip up to four RBA interest rate cuts this year

Under-pressure homeowners are set to win in a new mortgage war sparked by as many as four interest rate cuts this year, as major lenders race to slash fixed rates to entice new customers.

Experts say this month’s expected interest rate cut should spark new offers for those looking to refinance, with nine lenders cutting their rates in the past week — a potential saving of hundreds per month for those on the average-sized loan.

ANZ last week was the latest to take an axe to its fixed rate home loans, cutting by up to 0.4 percentage points for owner-occupiers and up to 0.45 percentage points for investors.

That takes ANZ’s lowest fixed rate to 5.39 per cent — the lowest two-year fixed rate of the big four banks.

It follows a similar slash from National Australia Bank and Macquarie last month. Mid-tier Bank of Queensland and Police Bank have the lowest fixed rates on the market at 4.99 per cent after cutting earlier this month.

Comparison site Finder’s head of consumer research Graham Cooke expects a May rate cut to to shift even more focus onto home loan rates and trigger a fresh round of refinancing.

Mr Cooke’s advice is for borrowers to find out their bank’s actual rate and what the lowest available rates are in the market.

“Call your bank and tell them you found a cheaper rate. If they don’t offer you a deal, then move to a new lender,” he said.

“There’s a lot of talk about whether the next (Reserve Bank) cut will be 25 or 50 basis points, but the gap between the average market rate and the lowest (rate) is about 40 basis points. You can give yourself nearly two rate cuts by switching, depending on your current rate.

“Refinancing is relatively smooth, you can do it online and your new lender will handle everything.”

The RBA next meets on May 19-20, when it is widely expected to cut rates. Borrowers were denied back-to-back mortgage relief in April, with the cash rate held steady at 4.1 per cent.

Finder predicts three to four more rate cuts before the end of the year, with each cut saving the average homeowner just under $100 a month. Economists at the four major banks expect between two and four cuts in the same *******.

Canstar data insights director Sally Tindall said the rate slashing was good news for borrowers.

“When the big banks go head-to-head on rate, what this tells us is that competition in the mortgage market is alive and kicking,” she said.

“While these kinds of rate cuts are typically reserved for new customers, this doesn’t mean existing borrowers have to miss out.

“If your bank is advertising a rate that’s lower than the one you’re on, pick up the phone and ask why. Alternatively, you can capitalise on this competition by turning yourself from a long-serving existing customer into a new one, unlocking discounts some banks are only willing to offer new business.”

Credit reporting agency Equifax recorded a 5.2 per cent jump in mortgage demand year-on-year in March, driven by refinancing activity. It found refinancing accounted for 37 per cent of all mortgage applications in March following the rate cut in February.

NAB boss Andrew Irvine is optimistic about falling interest rate and its ability to boost house prices, which could lead to more refinancing activity in the market.

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