Seven Australian banks have moved against the tide by cutting interest rates, even as millions of homeowners brace for a third mortgage hike.
New Canstar data shows the unexpected drops come just days before borrowing costs are set to rise again, with Australia's Big Four banks expected to pass on the Reserve Bank's latest hike from May 15.
ING cut its Mortgage Simplifier variable rate by up to 0.15 percentage points on May 5, dropping its lowest owner‑occupier rate to 5.74 per cent.
The data shows Bank First, Qantas Money, Bank of Queensland, Virgin Money, Heritage Bank and People First Bank have cut at least one variable rate since April.
Canstar data insights director Sally Tindall said the moves were a rare break from broader market behaviour.
'In the last rate-hiking cycle of 2022 and 2023, we saw banks slashing new customer variable rates left, right and centre in a bid to get business in the door,' she told realestate.com.au.
'This time around, there's been very little of the sort, with just a handful of lenders advertising new customer rate cuts.'
The RBA hiked the cash rate to 4.35 per cent on Tuesday afternoon. Governor Michele Bullock warned more increases could be on the way as inflation threatens to climb further due to the war in Iran and high government spending.
RBA governor Michele Bullock (pictured) warned more increases could still be on the way as inflation threatens to climb further due to the war in Iran and high government spending
The RBA hiked the cash rate to 4.35 per cent on Tuesday
For an owner‑occupier with a $600,000 mortgage and 25 years remaining at the start of this year's hikes, another 0.25 adds $91 to their minimum monthly repayments. The total increase across the three hikes since February would be $272 a month.
The increase will lift the average owner‑occupier variable rate to 6.26 per cent, pushing it above the 6.25 per cent mark for the first time since January 2025.
'Developments in the Middle East remain highly uncertain but under a wide range of possible scenarios, the conflict adds to global and domestic inflation,' Bullock told reporters on Tuesday.
'If left unchecked, higher costs get embedded into price and wage‑setting decisions.
'These second‑round effects could lead to even higher and more persistent inflation and if so, would require even more tightening in monetary policy to get inflation under control.'
Ms Tindall said it was likely rates would climb higher.
'While the Governor has said the cash rate is now in a position where they can 'be alert now to both sides of the risks', the central bank is certainly not ruling out further hikes – and anyone with a mortgage shouldn't either,' she said.
Average variable rates are sitting at around 6.43 per cent on Canstar's database.
Canstar's Sally Tindall (pictured) said the moves down were a rare break from broader market behaviour this year after seven banks cut interest rates for lenders
ING cut its Mortgage Simplifier variable rate by up to 0.15 percentage points on May 5, dropping its lowest owner‑occupier rate to 5.74 per cent (stock image)
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Finspo chief executive Angus Gilfillan said borrowers need to find their lender's 'edge of cliff' retention price and be ready to change institutions if necessary.
'That's often the time they will come out with their best price,' he told the Guardian.
'Customers need to be more informed compared with a couple of years ago, and need to cast their net a lot wider to get the cheapest price possible.'
He said borrowers could secure a cheaper rate by getting a competing offer and lodging a discharge form, often triggering a call from their lender's retention team with a better deal.