Trending News 19 June
Two more rate cuts expected for Christmas
The Reserve Bank has strongly signalled more rate cuts will be delivered in the next few months.
“A further easing in monetary policy would be appropriate in the period ahead,” the RBA board minutes of the last meeting read.
Commonwealth Bank economists are predicting official interest rates will be cut twice and hit 0.75 percentage points before Christmas. Markets have already priced in a 100 per cent chance of one more 0.25 percentage point rate cut by August.
Property prices continue to fall
Home prices fell in all Australian capital cities over the first three months of 2019 by an average of three per cent, according to new official data from the Australian Bureau of Statistics.
Sydney and Melbourne recorded shard decreases in median prices during the March quarter. Sydney median home prices have now fallen 10.3 per cent over the last year. Melbourne prices are down 9.4 per cent.
“Tight credit supply and reduced demand from investors and owner-occupiers has contributed to weakness in property prices in all capital cities this quarter,” said ABS chief economist Bruce Hockman.
Mortgage stress growing in Australia
More Aussie homebuyers are falling behind with their mortgage repayments according to ratings agency Standard & Poor’s. The proportion of borrowers who are now 30 days or more behind on their home loans rose to 1.53 per cent in April from 1.51 per cent in March and 1.36 per cent in April 2018.
Moody’s Investors Service is predicting that mortgage delinquencies will continue to rise during 2019 due to falling house prices, high levels of household debt and the conversion of many interest-only loans to principal and interest.
Standard & Poor’s measures delinquencies on mortgages funded by residential mortgage-backed securities (RMBS).
Banks continue to roll out big rate cuts ….
ME and Gateway Bank have slashed home loan rates for owner-occupiers and investors.
ME has cut rates across its range of fixed rate mortgages including cutting the two-year rate by 0.31 percentage points to 3.43 per cent (4.26 per cent comparison rate).
One-year fixed rates have been cut by 0.21 percentage points to 3.63 per cent (4.32 per cent comparison rate).
Gateway Bank has announced that it will pass on the full 0.25 percentage point RBA June rate cut to all of its home loan products from Tuesday, 25 June.
Gateway’s new standard variable rate for owner-occupiers paying principal and interest is now 3.39 per cent (3.41 per cent comparison rate) and 3.67 per cent (3.69 per cent comparison rate) for investors.
What is the lowest home loan rate in Australia?
The Reserve Bank of Australia cut official interest rates to 1.25 per cent in June prompting a round of home loan rate cuts by lenders.
Two home lenders have announced headline mortgage rates under three per cent.
Non-bank lender Reduce Home Loan’s ‘Low Rider’ loan has an owner-occupied variable headline and comparison rate of 3.09 per cent for borrowers with a 40 per cent deposit.