The markets are positively buzzing with speculation that a cut to the RBA cash rate will be happening sooner rather than later.
On Tuesday, the Reserve Bank board handed down its widely expected decision to leave the cash rate on hold, but it was the rhetoric surrounding the announcement that set pundits alight.
Commentators agreed both the statement accompanying the decision and RBA governor Michele Bullock's media conference marked a 'dovish pivot' in the central bank's previous hardline stance on its fight against inflation.
The first clue was a single sentence included in the statement:
The board is gaining some confidence that inflationary pressures are declining in line with these recent forecasts, but risks remain.
Gone was the RBA's long-touted catchphrase that it was "not ruling anything in or out" when it came to wielding a cash rate rise.
In the media conference that followed, Ms Bullock acknowledged the change in tone.
"The board wanted to give the message that they have noticed some of the data that is … on balance, a bit softer than we had expected, and so the board wanted to convey that their opinion and their views are evolving," she said.
Markets react
On the day, market expectations of a 25-basis point cash rate cut at the board's next meeting in February shot to an 84% chance.
That's since plunged to 62% following the release of stronger-than-expected jobs data on Thursday.
The unemployment rate dropped to 3.9% in November, down from 4.1%, defying market expectations of a rise.
Nonetheless, it seems home lenders will be reassessing their positions ahead of what could be an earlier cut than the previous consensus of May 2025.
Of the big four banks, only the Commonwealth Bank of Australia has stuck with its prediction of a February rate cut, with the others pushing theirs out to May.
On Thursday, CommBank reiterated it would be sticking with its February forecast, but said the call is "clearly in doubt" thanks to the surprise jobs figures.
The RBA board will no doubt take the data into account at its February meeting, as well as the all-important December quarter inflation data, scheduled to be released on 29 January.
So, with all that swirling in the forward calculations of the mortgage market, only two smaller lenders made rate changes this week - one cutting and the other raising.
In the spirit of the times, let's start with the cuts.
Qld Country Bank cuts variable rates
The North Queensland-based bank has taken up to 30 basis points off its Ultimate Special Variable Package rate to 5.89% p.a. (6.24% p.a. comparison rate*) for owner occupiers.
The rate is available to borrowers with loan-to-value ratios (LVRs) less than 80% and between 80-95% LVR, as well as those making principal and interest (P&I) and interest only (IO) repayments.
Here are the new rates for owner-occupiers:
| Product | % Change | New Rate | Comparison Rate* |
|---|---|---|---|
| Special Variable Package P&I <80% | -0.10 | 5.89% p.a. | 6.24% p.a. |
| Special Variable Package Rate P&I >80% | -0.30 | 5.89% p.a. | 6.24% p.a. |
| Special Variable Package Rate IO <80% | -0.10 | 5.89% p.a. | 6.23% p.a. |
| Special Variable Package Rate IO >80% | -0.30 | 5.89% p.a. | 6.23% p.a. |
The Ultimate Home Loan Package comes with an annual package fee of $395 while lenders mortgage insurance (LMI) may also apply to loans with >80% LVR.
Investor rates under the Ultimate Special Home Loan Package have also been cut to 6.09% p.a. (6.44% p.a. comparison rate* for P&I repayments and 6.42% p.a. for IO repayments).
Again, the flat rate applies to investor loans <80% LVR and up to 90% LVR for investors making IO repayments and up to 95% LVR for those paying P&I.
Newcastle Perm raises fixed rates
The customer-owned Newcastle Permanent increased its fixed home loan rates for both owner-occupiers and investors by up to 20 basis points on Thursday.
The jump will affect the lender's Residential, Investment, and Premium Package fixed rates for borrowers making both P&I and IO repayments.
The new lowest rate offered is now 5.59% p.a. (7.48% p.a. comparison rate*) for borrowers with an LVR of 80% or less fixing for three years with a Premium Package (Special) fixed rate and making P&I repayments.
That's a 10-basis point jump on the old rate.
Newcastle Permanent's special rates apply to Premium Package holders with LVRs of 80% or less only.
Borrowers with higher LVRs will pay 10 basis points more in interest than special rate holders.
Here's a selection of the new Premium Package rates for owner-occupiers making P&I repayments below:
| Fixed Term | Product | % Change | New Rate | Comparison Rate |
|---|---|---|---|---|
| 1 yr | Premium Plus Package Fixed - Special | +0.10 | 5.89% p.a. | 7.92% p.a. |
| Premium Plus Package Fixed | +0.10 | 5.99% p.a. | 7.94% p.a. | |
| 2 yr | Premium Plus Package Fixed - Special | +0.20 | 5.69% p.a. | 7.69% p.a. |
| Premium Plus Package Fixed | +0.20 | 5.79% p.a. | 7.71% p.a. | |
| 3 yr | Premium Plus Package Fixed - Special | +0.10 | 5.59% p.a. | 7.48% p.a. |
| Premium Plus Package Fixed | +0.10 | 5.69% p.a. | 7.51% p.a. |
Premium Plus home loan packages come with a $395 annual fee.
Fixed rates for owner-occupiers not opting for the Premium Plus package are 10 basis points higher across the board.
Newcastle Permanent is also one of a handful of lenders offering a cashback deal for certain borrowers signing up to its Real Deal variable home loan special.
40-year home loan option launched
Finally, in the mortgage market this week, alternative lender Pepper Money will give all its customers the option of taking up a flexible 40-year loan term.
Pepper is pitching the new advertised loan term as a way for clients who don't meet loan serviceability requirements to get a foot in the housing market.
A loan term longer than the standard 30 years will effectively lower regular repayments but see borrowers pay considerably more in interest over the life of the loan.
Pepper Money said it's already receiving significant enquiries about the 40-year option.
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| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
6.04% p.a. | 6.06% p.a. | $3,011 | Principal & Interest | Variable | $0 | $530 | 90% | 4.6 Star Customer Ratings |
| Promoted | Disclosure | |||||||||
5.99% p.a. | 5.90% p.a. | $2,995 | Principal & Interest | Variable | $0 | $0 | 80% | Apply in minutes |
| Promoted | Disclosure | |||||||||
6.09% p.a. | 6.11% p.a. | $3,027 | Principal & Interest | Variable | $0 | $250 | 60% |
| Promoted | Disclosure |
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