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PPG_Blog_March_image 5_interest rate cuts

A growing number of lending experts have expressed their belief that banks will soon make small independent rate cuts to their standard variable rates.

A survey conducted by home loan provider 1300HomeLoan of its broker network found about three quarters were expecting a reduction in retail bank lending rates, even if the Reserve Bank of Australia (RBA) keeps the official cash rate steady.

"The banks have no issues at the moment with cost of funds, and as they compete for more business, variable rates could be reduced slightly in the months ahead," 1300HomeLoan managing director John Kolenda said in a statement.

The ANZ bank already reviews its own rates every month and alters them independently of the RBA. ANZ announced this change in procedure last year. A small cut to rates would most likely equate to around 10 basis points. A 0.10 per cent rate drop could save borrowers a handy $7000 off an average $300,000 loan over its lifespan.

The Reserve Bank of Australia has kept the cash rate at three per cent at its two board meetings this year, but has indicated it has adequate scope to ease monetary policy further should the economy require an added boost.

Borrowers need to be cautious, however, as any independent rate cuts made by the banks could also mean independent rate increases whenever they deem it necessary

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