The RBA has kept the cash rate on hold for the 22nd consecutive board meeting at a historical low of 1.5 per cent. At this point in time it is expected interest rates will remain on hold well into 2019.
There has been upward pressure on the cost of funds for smaller bank and non-bank lenders in recent months with Beyond Bank and ING bank raising variable interest rates across certain loan products over the past few weeks. Out of cycle rate increases were 6 bps (for both investors and owner occupiers) and 10 bps (only impacting owner occupiers) respectively.
We expect to see further out of cycle rate increases from smaller banks and second tier lenders in coming months.
