Australia's least trusted and most trusted banks, according to an earlier survey, slashed rates by up to 60 basis points in the past week.
Trustworthiness was ranked in a Banking Brand and Trust Index survey released early in May, with Greater Bank deemed the 'most trustworthy' with a score of +23 (on a scale from negative 100 to positive 100), while Bank of China was least trustworthy at -21.
Both of these banks have cut home loan rates over the past week.
Bank of China made cuts to its fixed home loans from one to five years, including:
- Discount Plus Home Loan P&I Special Offer: 10 basis point cut to 2.68% p.a. (3.13% p.a. comparison rate*)
- Fixed Rate Investment Loan P&I 1 Year: 60 basis point cut to 3.09% p.a. (4.26% p.a. comparison rate*)
Across the board, Bank of China cut interest rates on home loans for both owner-occupiers and investors paying interest-only (IO) as well as principal and interest (P&I) by between nine and 60 basis points.
Keep in mind home loan 'special offers' can be withdrawn at any time.
Last Friday, Greater Bank cut home loan interest rates by up to 45 basis points, with investors getting most of the sugar. Some key cuts include:
- Great Rate Investment Fixed P&I 2 Years: 45 basis point cut to 2.54% p.a. (3.79% p.a. comparison rate*)
- Great Rate Fixed 1 Year: 10 basis point cut to 2.09% p.a. (3.53% p.a. comparison rate*)
Greater Bank's loans are now edging close to breaking the 1% barrier, and earlier in the week one lender broke that barrier.
Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner-occupiers.
Smart Booster Home Loan
- Discount variable for 1 year <=80% LVR
- No ongoing fees
- Unlimited redraw facility
Monthly repayments: $1,476
- Discount variable for 1 year
- No ongoing fees
- Unlimited redraw facility
Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.
Challenger banks bring on the cuts
More lenders, particularly customer-owned institutions and challenger brands, cut rates in the past week.
Queensland Country Bank
The bank that sponsors the NRL Cowboys' stadium made some cuts as 'special' offers at the start of the month:
- Investment Special Variable Package P&I 80%: 35 basis point cut to 2.79% p.a. (3.17% p.a. comparison rate*)
- Special Variable Package P&I 80%: 35 basis point cut to 2.79% p.a. (3.17% p.a. comparison rate*)
Queensland Country Bank stands among very few other lenders that offer the same rates for both owner-occupiers and investors.
The packaged home loans give borrowers access to a transaction account, a low-rate credit card and offset account.
Bank First also made cuts to some packaged home loans this week.
All cuts in the past week were by 25 basis points. Some include:
- Premier Package Owner Occupier P&I Fixed 3 Years 80%: 25 basis point cut to 2.19% p.a. (3.26% p.a. comparison rate*)
- Complete Investment P&I Fixed 3 Years 80%: 25 basis point cut to 2.54% p.a. (3.43% p.a. comparison rate*)
Like with many lenders, to access the most competitive rates borrowers usually need to have a deposit of 20% or greater, as seen in the cuts above.
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.
In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may inﬂuence the cost of the loan.
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