Banks set to with­hold rate cuts

Townsville Bulletin - - NEWS - SO­PHIE ELSWORTH

PROP­ERTY own­ers, in­clud­ing in­vestors, are likely to miss out on full rate cuts if the Re­serve Bank of Aus­tralia drops the cash rate fur­ther.

Banks are con­tin­u­ing to jack up the rates on in­vestor loans, in­clud­ing Na­tional Aus- tralia Bank, which yesterday an­nounced it would in­crease vari­able in­ter­est rates on in­ter­est- only home loans by 29 ba­sis points to help cool down Aus­tralia’s prop­erty mar­ket.

But de­spite this, lenders are still of­fer­ing both in­vestors and owner- oc­cu­piers loans even if they have lit­tle or no de­posit.

In­vestors are con­tin­u­ing to swarm to the mar­ket in Syd­ney and Mel­bourne and AMP chief economist Shane Oliver said it was “quite likely” bor­row­ers would miss out on fur­ther cuts if the cash rate dropped again.

“It’s quite pos­si­ble that if the Re­serve Bank was to cut in­ter­est rates again ( by 25 ba­sis points) that the banks would only cut them by 10 or 15 ba­sis points for all types of loans,’’ he said. “There’s still scope out there for mort­gage rates to fall – I think it’s 50/ 50 whether there will be another rate fall this year.”

The Aus­tralian Pru­den­tial and Reg­u­la­tion Au­thor­ity last year an­nounced it would be clamp­ing down on in­vest­ment loans and would put a 10 per cent per year cap on lend­ing to land­lords.

Home Loan Ex­perts man­ag­ing di­rec­tor Otto Dargan said tougher cuts on lend­ing should be ex­pected.

Last week some of the na­tion’s big­gest banks, in­clud­ing Com­mon­wealth Bank and ANZ, in­creased the in­ter­est rates on in­vestor loans.

Mort­gage Choice spokes­woman Jes­sica Darn­brough urged po­ten­tial prop­erty buy­ers to try to save “at least a 5 per cent de­posit” be­fore buy­ing prop­erty.

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