Banks set to withhold rate cuts
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.