It was no surprise that the RBA decided to leave the official cash rate on hold on Tuesday 4 October following the last rate reduction down to 1.5% in August 2016.
After the RBA announced that the cash rate would remain at 1.50 per cent in October, RBA Governor Philip Lowe noted that while much of Australia’s economic data improved in the previous month, there were some areas in which the figures had moderated.
“The global economy is continuing to grow, at a lower than average pace. Labour market conditions in the advanced economies have improved over the past year, but growth in global industrial production and trade remains subdued,” he said. Unemployment has fallen, but “there is considerable variation in employment growth across the country”, Mr Lowe explained, and despite a recent slowdown, household consumption continues to grow at a reasonable pace.
Experts tipping interest rate cut in November
AMP Capital chief economist Shane Oliver commented “We remain of the view that the RBA will cut rates again at its November meeting when it reviews its economic forecasts after the release of the September quarter inflation data in late October.”
Big four banks made $67.9m by delaying August home loan interest rate cuts
The big 4 banks are still under fire for not passing on the August rate cut quick enough and pocketing an estimated $67.9 million profit on their home loan assets.
In August 2016, ANZ made $6.9 million by delaying their rate cut by nine days, CBA made $22.6 million for delaying their rate cut by 16 days, NAB made $10.2 million for waiting 16 days before cutting, while Westpac made $28.2 million by delaying interest rate reductions by 20 days.
Financially savvy borrowers looking beyond the big four banks
Whilst the big four banks hold the majority of owner occupied and investment property home loans, 2nd tier lenders are proving to have a bigger appetite for new business.
The second tier lenders are providing competitive home loan interest rates and more flexible credit policy for property investors. Property investors have struggled with restricted policies at the big four banks and have had to look elsewhere for alternative options.
As mortgage brokers in Sydney and the Central Coast, Mint Equity is seeing buyers ditch their loyalty to their own bank and look at other, more competitive home loan and property investment options. It’s clear that ‘bank/customer loyalty’ is not a reciprocal arrangement between the lender and the borrower, so home owners and property investors are more flexible these days to move to another lender.
Second tier lenders providing more options for property investors
Second tier lenders are reaping the rewards of being excluded from the APRA crackdown on the big 4 banks percentage of investment property loans. Being smaller, they fly under the radar and are providing alternative finance options for investors. And they are providing low interest rates and more flexible lending criteria.