No RBA rate cut, but do banks react anyway? Here’s what to know
Anyone still hoping for a Christmas rate cut would be disappointed today.
The cash rate is ending the year at 3.60%, as the Reserve Bank of Australia (RBA) responds to an uptick in inflation.
This was widely expected by experts, with every single respondent to Finder's RBA survey predicting the rate would hold.
But as the cash rate stays where it is, we're not necessarily seeing the same for lender rates.
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Fixed rates moving out of cycle
Earlier this year, lenders cut fixed rates to lower than variable rates.
This often happens when rates are falling, as lenders try to entice borrowers to fix their rates before variable rates fall further.
Although for most of this year we expected more rate cuts, data over the last couple of months has changed things.
Unemployment figures plus higher inflation means talk has turned to whether rates would increase.
One indication of this is that banks have started increasing their fixed interest rates.
"A sign of what's to come"
Over the last few weeks, banks like Westpac, Macquarie Bank, Suncorp, Newcastle Permanent, Queensland Country Bank, BCU Bank and P&N Bank increased their fixed rates.
This "could be a sign of what's to come" says mortgage broker and director of Mortgage Wealth, Raj Ladher.
"The RBA hasn't made any movements whatsoever but banks are increasing their fixed rates. I think the biggest rate hike I've seen on a fixed rate is 0.3%. That's pretty big considering that when the RBA is reducing rates, they're reducing at a quarter of percent. So these fixed rates are jumping higher. That's a telltale sign of what potentially is going to be ahead of us."
For now, experts remain divided on what could happen next. 29% of Finder's panel of RBA experts forecast at least 1 rate rise in the next 12 months. The exact same proportion forecast a rate cut instead.
Sources
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