Macquarie Bank has stepped up the competition in the mortgage market by cutting its fixed home loan rates by 20 basis points, now offering some of the lowest fixed rates available across Australia.

The move comes just ahead of the Reserve Bank's May 19-20 meeting, where markets are pricing in a 100% chance of a cash rate cut. Macquarie offers new market-low fixed rates from 5.19%

In its latest rate move, Macquarie has dropped two- and three-year fixed rates to 5.19% p.a., becoming the most competitive option among both the major banks and second-tier lenders.

"These sweeping cuts from Australia's fifth-largest home loan lender puts the bank squarely in pole position as the lowest fixed rate lender in the market, with the most competitive fixed rates in each of the one- to five[-year terms]," said Canstar data insights director Sally Tindall.The cuts apply to all fixed terms and are available to both owner occupiers and investors, with loan-to-value ratios from below 70% to as high as 95% eligible.This is Macquarie's second rate cut in the past month, signaling a strategic push to gain ground on the big four banks by aggressively pricing its fixed loan products. Macquarie has reduced its fixed rate home loans by a further 20 basis points, significantly undercutting the rates offered by the big four banks.

With its latest changes, two- and three-year fixed rates now start at 5.29% p.a. for owner occupiers—matching the lowest publicly available fixed rates in the market for those terms.

Borrowers are still however reluctant to lock in despite cheaper rates. Even with fixed interest rates reaching multi-month lows, experts say that borrowers are unlikely to rush into fixed-term loans, especially with a rate cut around the corner, news.com.au reported.

"Rates as low as 5.19% are still unlikely to prompt many borrowers into locking into a fixed mortgage and effectively handing over their chance to benefit from any future cash rate cuts," Tindall said.

While 18 lenders, including NAB, have lowered at least one fixed rate over the past month, the demand for fixed-term products remains subdued.