More focus has been put on fixed home loan interest rates, as a bevy of lenders in the past week cut by up to 97 basis points.
A few more lenders passed on home loan rate cuts in the past week, over a month on from the emergency RBA rate cut in March.
Last week, People's Choice Credit Union was one of the only ones to make cuts - but others joined the party this week.
Lenders such as Bank of Sydney, Bankwest, Bank First and various mutuals cut home loan interest rates - primarily in the fixed rate sector.
Across the board, many fixed home loans now have comparable interest rates to their variable loan counterparts in the residential space, as seen in the table below.
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. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 03 August 2020. View disclaimer.
Bank of Sydney
Last Friday, Bank of Sydney made cuts to quite a few of its fixed residential and investment loans. Key cuts were:
- Expect More Residential Fixed 5 Years (No Fee): 97 basis point cut to 2.99% p.a. (2.98% p.a. comparison rate*)
- Expect More Investment Fixed 5 Years: 91 basis point cut to 3.35% p.a. (3.85% p.a. comparison rate*)
Expect More Residential 1 and 2 year fixed rates also got a haircut by 87 basis points - now down to 2.79% p.a. (2.95% p.a. and 2.93% p.a. comparison rates* respectively).
For the Expect More packaged home loans, borrowers must have an LVR of 70% i.e. a 30% deposit.
Bankwest's biggest cuts were to its fixed loans, paying principal and interest (P&I).
- Complete Home Loan Fixed Investment 3 Years P&I: 20 basis point cut to 2.49% p.a. (3.98% p.a. comparison rate*)
- Fixed Rate Investment 3 Years P&I: 20 basis point cut to 2.69% p.a. (4.75% p.a. comparison rate*)
The Complete Home Loan is a packaged product that includes a credit card and offset account options.
Bank First cut a range of fixed home loans 60 basis points, both for owner occupiers and investors. Key cuts were:
- Premier Package O/O 1 Year P&I 80%: 2.29% p.a. (3.40% p.a. comparison rate*)
- Premier Package O/O 2 Years P&I 80%: 2.29% p.a. (3.34% p.a. comparison rate*)
- Premier Package Inv 1 Year P&I 80%: 2.59% p.a. (3.83% p.a. comparison rate*)
- Premier Package Inv 2 Years P&I 80%: 2.59% p.a. (3.75% p.a. comparison rate*)
The Premier Package includes redraw and offset facilities, early payments capability and the ability to borrow up to 85% LVR with no lenders mortgage insurance.
The Mutual Bank
The Mutual cut home loan rates by up to 70 basis points, mainly in the fixed realm paying P&I. Key cuts were:
- Package Home Loan Premium Fixed 1 Year 150k+: 70 basis point cut to 2.29% p.a. (3.78% p.a. comparison rate*)
- Premium Fixed 1 Year: 70 basis point cut to 2.39% p.a. (3.99% p.a. comparison rate*)
- Package Home Loan Inv Premium Fixed 1 Year 150k+: 5 basis point cut to 3.29% p.a. (4.23% p.a. comparison rate*)
- Investor Premium Fixed 1 Year: 5 basis point cut to 3.39% p.a. (4.45% p.a. comparison rate*)
The Package home loans include offset accounts, a redraw facility and discounted access to other products.
G&C Mutual Bank
G&C Mutual cut home loan rates by up to 40 basis points.
The home loans to get some love were, you guessed it, fixed loans, primarily for investors. Key cuts were:
- Investment Standard Fixed P&I 5 Years: 40 basis point cut to 3.39% p.a. (3.45% p.a. comparison rate*)
- Investment Standard Fixed P&I 1 Year: 30 basis point cut to 2.99% p.a. (3.04% p.a. comparison rate*)
Various other investment loans fixed from 1-5 years also saw cuts, including those paying interest-only.
Australian Unity cut a range of home loans for both owner occupiers and investors, and all by 10 basis points. Key cuts were:
- Health Wealth Happiness Fixed 1 Year P&I: 2.59% p.a. (3.29% p.a. comparison rate*)
- Health Wealth Happiness Fixed 3 Years P&I: 2.59% p.a. (3.24% p.a. comparison rate*)
- Wealth Builder Investor Fixed 1 Year P&I: 2.95% p.a. (3.62% p.a. comparison rate*)
- Wealth Builder Investor Fixed 3 Years P&I: 2.95% p.a. (3.57% p.a. comparison rate*)
These are package home loans. The Health Wealth Happiness package includes discount rates on other products, as well as up to $1,250 for couples/families for Australian Unity private health cover.
The Wealth Builder package also includes private health discounts, optional credit card with no annual fee and more.
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 2019. 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 2019) 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 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.
*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
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