The peak body representing Australia’s finance brokers has applauded the Commonwealth Bank of Australia (CBA) and Westpac for giving in to market pressures and reducing fixed interest rates for new borrowers.

Managing director of the Finance Brokers Association of Australia (FBAA) Peter White said the downward moves are not surprising given increasing competition from lenders who were more competitive across the loan products.

“Late last month I called on banks to immediately cut interest rates as evidence increased that the next move by the Reserve Bank would be down. In March there was a sharp decline in short term bank funding rates and the smaller banks were already revising down.”

The moves by CBA and Westpac puts them ahead of the other majors for owner-occupiers and investors and improves their rating against some smaller lenders. Recent figures suggest 40 lenders have dropped rates since the start of 2019.

“The decisions are interesting because they put pressure on the other major banks to at least match them or risk losing more market share. That’s exactly why Westpac moved yesterday after the CBA.”

Mr White said there are many mixed signals in the finance sector at the moment but there is growing speculation that there may be at least one, or possibly two, interest rate reductions by the Reserve Bank this year.

“Consumers will be keeping a close eye on the big banks when the official rates do go down. I expect the banks won’t pass-on the rate cuts in full and that will lead to more confusion for borrowers trying to get the best deal.”

Close to 60 per cent of borrowers currently source their home-loans through brokers rather than going direct to lenders.

“There are very good reasons for that. The royal commission blasted the banks for their culture of greed and lack of transparency. Brokers have a large number of loan providers to choose from and they find the right deal to suit the individual circumstances of each consumer.”