Banks could have further to move on fixed rates before the current wave of cuts is over, it has been claimed.

With both major lenders and non-banks issuing a flurry of fixed rate reductions in past weeks, National Finance Club manager of retail distribution Andrew Clouston has told Australian BrokerNews he believes many lenders still have room to move on fixed rates. Clouston said reductions in wholesale funding costs have been significant, and that some lenders have yet to pass on the full measure of these savings.

"Some people in the market are probably holding onto that reduction in funding costs," Clouston said.

NFC recently reduced its three-year fixed rate by 30bps to 6.29%, a move Clouston said represents the full impact of reductions to the lender's funding costs. He stated that the move was made while still protecting profit margins.

"In reducing rates to the level we have now we've managed to be able to maintain our profit margins where they were a few months ago. We've just seen a reduction in the cost of wholesale funding and passed on that reduction in wholesale costs in full," he commented.

Clouston believes, however, that many lenders are building larger margins into their fixed rate reductions.

"I think there would be some lenders waiting to see where the bottom actually is. Some of them are testing the margins and building fatter margins into their funding range. We've just done a full pass-on of that," he remarked.