I am repeatedly seeing media articles describing a mortgage price war by selectively quoting from interest rate aggregation sites and extrapolating that to the whole system. There is a much easier and more accurate way to track real lending rates. The RBA provides a monthly updated data series called “Indicator Lending Rates” that averages the interest rates available across the major lenders in all major categories, affording a better guide to what the overall interest rate is for the system, which is what matters for any given market.
Here’s the chart for housing:
Since the August 2013 rate cut, the only variable interest rate average to fall was non-banks several months ago, by 25bps. In fixed-term mortgages, there was a move up and then down as markets misread the prospect of rate rises and perhaps in response to non-bank cuts as well. That’s not to say that there aren’t other incentives being deployed that get around actual cuts – such as cash backs, lowered lending standards etc – but there is no “price war” or “out of system” rate cuts.
