Banks wary of raising rates due to "strong competition between lenders"

In a surprise finding, the Reserve Bank of Australia (RBA) has reported that lenders have held back from passing on the full series of rate rises that have occurred over the past year.

 Between May 2022 and June 2023, the RBA increased the cash rate from 0.10% to 4.10%, an increase of 4.00 percentage points. But during the same period, lenders increased their variable interest rates by an average of only 3.37 percentage points.

The RBA said this was due to “the effect of discounting on variable-rate housing loans associated with strong competition between lenders”.

 As these rate rises have been occurring over the past year, mortgage brokers have been helping Australians refinance at record levels. This has put pressure on banks to be restrained in how much they increase rates, because they know that if their rates are too high, brokers will recommend other lenders to their clients.

 Contact Amol from Juice Finance on 0435 040 986 or go to www.juicefinance.com.au and click ‘Get Started’ to find out more.