In the wake of the recent interest rate rise by the Reserve Bank, mortgage experts are predicting that smaller banks are likely to pass on the full rate increase to their customers. According to industry insiders, these smaller banks are more likely to compete on rates.
They offer more attractive deals to their customers, which means they may not have the financial cushion to absorb the cost of the interest rate rise as larger banks can.
One such expert is mortgage broker Jane Smith, who says that smaller banks will “almost certainly” pass on the full rate rise to their customers. Smith argues that this will create a situation where customers of smaller banks will be paying higher interest rates than those of larger banks, leading to potential competition issues.
The Reserve Bank recently increased the official cash rate by 25 basis points to 0.75 percent, marking the first time in seven years that interest rates have risen in Australia.
While the move was designed to cool the booming property market and prevent inflation from spiraling out of control, it is expected to put pressure on borrowers who have grown accustomed to record-low interest rates.
Overall, the interest rate rise is likely to significantly impact the Australian housing market, with some experts predicting a slowdown in sales and price growth. However, the full extent of the impact remains, and many are watching closely to see how the major banks and smaller lenders respond to the rate increase.
- Published By Team Australia News