RBA increased cash rate but the Banks interest rates actually fell for Fixed Term
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RBA increased cash rate but the Banks interest rates actually fell for Fixed Term
We received lots of bad news on a huge double hike in the official cash rate from the RBA, and which the big four banks passed on in full on their “variable rates” but most of us didn’t get the news that some key lending rates were actually slashed.
“Fixed-term” rates, especially for four years, were cut by the Commonwealth Bank, Westpac, Macquarie and Suncorp.
The decisions were a sudden reversal to some savage hikes on fixed rates just weeks ago by the major lenders, with both CBA and Westpac slashing their four-year loans to 4.99%. In CBA's case, that lopped around 1.6% off its previous level so that it now sits well below the variable rate of 5.8%
The likelihood of a recession continues to grow, and the interest rate trajectory into orbit that most experts were predicting just weeks ago is being hurriedly dismantled and the prospect of lower rates next year is rising.
After pressuring central banks from the beginning of last year to begin a spate of rate hikes, global money markets have suddenly eased.
Global money markets are unwinding rate hike bets as the smell of recession rises.
The Bank of England has continued raising interest rates even though it expects that will tip the UK into a deep recession,
Sydney and Melbourne, the two capital city housing markets that led the extraordinary surge in the post-pandemic real estate boom, are dropping with Sydney down 2.2% in July and Melbourne down 1.5%
Auction clearance rates, which were well above 80% during the boom, have now dropped to 52% in Sydney and 54% in Melbourne.
The Banks have responded by reducing the amount they will lend to new borrowers, particularly first-home buyers, and that will feed through to even lower prices and auction clearances.
So what does the future hold? No one really knows, so all we can do is try and read the indicators and hope we jump on the right wave.
