Since then, the Reserve Bank has said that although Trump’s tariffs could cause inflation, the tariffs could weaken the economy. 

So the OCR may need to fall faster to support the economy. 

The markets expect another OCR cut or two. So they’ve started pricing the cuts in. That’s why wholesale rates are down.

Here’s the thought process: 

Trump threatens tariffs → Markets fear a slowdown → Reserve Bank (may) cut the OCR more → Markets anticipate this move → Mortgage rates drop.

Let’s look at how far rates have dropped.

Interest rates just took a dive (Here’s by how much)           

Here are the interest rate cuts we got over the last month vs the month before. 

In my last update, the 1-year rate hadn’t fallen at all. 

Yet over the last month, the average 1-year rate fell 0.16%.

The average 6-month rate is down 0.28% in just a month. That’s huge. In the previous month, it only dropped 0.02%.

Let me be clear. I do not support Trump’s tariffs. I think they’re bonkers.

But borrowers can benefit from the uncertainty his policies create.

But how much can you negotiate off your interest rate?

No room for negotiation

Remember, the bank usually discounts its rate when you take out a mortgage. 

So they might advertise 5.59% for the 6-month rate. 

But when you borrow the money, they might offer you 5.49%.

It’s hard to see these discounts as a borrower. So, I like to share what we’re seeing at Opes Mortgages.

Right now, there is almost no room for negotiation on the 6-month to 3-year rates. 

Banks advertise their best rates and aren’t discounting much. 

When they do, it’s a small 0.05 – 0.1% cut. 

The exceptions are the 4-year and 5-year rates. 

But these discounts are a bit deceptive. 

A bank like TSB might advertise at a rate of 5.89% for the 5-year. But, behind the scenes, they’ll discount to 5.39%. 

Meanwhile, Westpac currently advertises 5.39% for the 5-year rate. Then doesn’t discount at all. 

These two banks offer the same rate once you negotiate. 

But it’s hard to see that from the outside. That’s why you use a mortgage adviser. 

So when you see that the average bank discounts the 5-year rate by 0.2%, you can’t say “yippee! Westpac is advertising 5.39% … so I’m going to negotiate that down 0.2%!”

Nope. Westpac’s already advertising the lowest 5-year rate. No discounts off that. 

I point this out because discounts off the 4-year and 5-year rates always seem high. 

It’s because some banks discount a lot. Some don’t discount at all. 

What are the lowest interest rates in the market?

The lowest rate in the market is now 4.92%. That’s for the 18-month rate. 

Behind the scenes (after you negotiate), all 4 big banks are hovering at 4.92% - 4.95% for that 18-month rate. 

And all major banks now offer 4.99% for both the 1-year and 2-year rates. 

For many borrowers, this could mean saving thousands when they refix their rate.

How long do I fix for?

Interest rates have fallen a lot. And the future feels uncertain. 

Most mortgage advisers say their clients prefer fixing for just 1-year. 

But there is also a large number who say their clients prefer the 2-year.

If I showed you this same graph a year ago … it was clear. Over 80% of mortgage advisers preferred the 1-year rate. 

Now it’s a more even spread.

I’m a mortgage adviser … and the 1-year rate remain popular among my clients. 

But watch out for that 3-year rate. If it gets down to 4.79% it’ll probably become my favourite. 

What cashback can you get?

No change to cashbacks since last month. Most banks still offer 0.9% - 1% of your loan’s value.

If you take out a $600k mortgage, you can generally expect a $5,400 - $6,000 cashback. Though, remember not all borrowers get them.

Need help with your mortgage?

Need help with your mortgage? 

Hit reply and let me know your situation. I’ll come right back to you to see if my team can help.

Cheers,

Pete