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HC Homeowners blogHome owners only paying 0.3% less than a year ago

The Reserve Bank of Australia reduced the cash rate by 50 basis points in the first half of 2015 and kept it on hold in the first meeting of 2016 for the 8th time in a row. They released the Statement on Monetary Policy recently and provided an analysis of pricing and policy changes in the Australian mortgage market in its latest update.

It was identified that the average advertised standard variable mortgage rates for owner-occupiers are only 30 basis points lower than they were a year ago despite official cash rates being reduced by 50 basis points. The statement indicated that there’s an increased dispersion of housing interest rates across lenders over recent months, with the major banks raising housing interest rates by more than the mid-size and smaller lenders. The second half of 2015 saw the majority of lenders increase their standard variable housing interest rates by 15 to 20 basis points, after raising rates for housing investors in the middle of the year.

However, lenders have not raised their advertised fixed rates to the same extent as standard variable housing rates, with fixed rates around 40 and 60 basis points lower over the year for investors and owner-occupiers respectively.

Household survey data indicate that the share of households ahead on their mortgage repayments has increased over recent years for both owner-occupiers and investors to its highest level since the early 2000s with borrowers taking advantage of lower interest rates to reduce principal.

Please contact your usual Hanrick Curran adviser if you require assistance in assessing if your finance arrangements are competitive, or speak with one of our Business Advisory specialists, Matthew Beasley, Jamie Towers, Tony Hunt, Tim Taylor or John Kotzur.


Please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice.