It was another busy week for home loan interest rate cuts, with Bendigo & Adelaide Bank, Citi, Heritage Bank and others chopping the dinosaur.
ANZ cut earlier in the week, making it twice in one week ANZ made some changes to its home loan products.
Other institutions to cut home loan interest rates in the past week were Bendigo and Adelaide Banks, Citi, Heritage, Suncorp and others such as AMP, Bank Australia, and BCU.
Fixed home loans tend to be getting most of the love these days, but overall, the variable market is still very competitive, which you can see below in the owner-occupied principal & interest (P&I) segment.
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.
Adelaide Bank rate cuts
Adelaide Bank made quite a raft of cuts to its fixed loans for both owner occupiers and investors.
The biggest cut was by 90 basis points, applied to the SmartSaver Fixed interest-only loan for one year - down to 2.79% p.a. (2.85% p.a. comparison rate*).
Other key cuts include:
- SmartFix P&I 2 Years: 60 basis point cut to 2.29% p.a. (2.95% p.a. comparison rate*)
- Investment SmartFix P&I 2 Years: 70 basis point cut to 2.59% p.a. (3.25% p.a. comparison rate*)
The main difference between SmartFix and SmartSaver is that SmartFix has an attached offset account.
Bendigo Bank rate cuts
Bendigo Bank - part of the same family as Adelaide Bank - also made a wide variety of cuts, mainly to fixed loans.
The biggest cut was by 65 basis points, which was the Basic Fixed Owner Occupied P&I 1 Year loan, down to 2.34% p.a. (3.13% p.a. comparison rate*). Other key cuts were:
- Connect Package Fixed Owner Occupied 1 Year 250k+: 65 basis point cut to 2.59% p.a. (4.04% p.a. comparison rate*)
- Basic Investment Fixed P&I One Year: 65 basis point cut to 2.64% p.a. (3.47% p.a. comparison rate*)
The Connect Package allows borrowers to 'connect' up to three additional products, including a transaction account, car insurance, credit card and more, with a monthly service fee of $20.
Citi rate cuts
Citi cut rates by up to 40 basis points.
The 40 basis point cut applied to a few loans, including the Mortgage Plus Standard Fixed 1 Year (P&I 80% LVR 350k+) loan, down to 2.49% p.a. (3.20% p.a. comparison rate*).
Other key cuts included:
- Investment Standard Fixed P&I One Year 80% 350k+: 30 basis point cut to 2.79% p.a. (5.02% p.a. comparison rate*)
- Standard Fixed P&I 5 Years 80% 350k+: 20 basis point cut to 2.79% p.a. (4.30% p.a. comparison rate*)
One of the reasons for the higher comparison rate on fixed loans, like with all banks and lenders, is that the comparison rate assumes the borrower will accept the lender's revert rate at the end of the fixed period, instead of refinancing.
Heritage Bank rate cuts
Heritage Bank also cut rates by up to 40 basis points, which includes the Residential Fixed 2 Year loan, down to 2.59% p.a. (4.26% p.a. comparison rate*).
Other key cuts were:
- Home Advantage Residential Fixed 1 Year 150k+: 30 basis point cut to 2.59% p.a. (3.40% p.a. comparison rate*)
- Home Advantage Investment Fixed P&I 1 Year 150k+: 29 basis point cut to 2.89% p.a. (3.65% p.a. comparison rate*)
'Home Advantage' is a packaged loan series, allowing customers to bundle credit cards, lines of credit, and an offset account.
Suncorp rate cuts
Suncorp cut rates by up to 35 basis points, which encompassed a variety of fixed loans, including the Home Package Plus P&I loan with an 80% LVR for 2 years.
This rate was reduced to 2.29% p.a. (3.32% p.a. comparison rate*). Other cuts included:
- Owner Occupied Fixed P&I 2 Years: 35 basis point cut to 2.74% p.a. (4.75% p.a. comparison rate*)
- Home Package Plus Investment <80% Fixed P&I 3 yrs: 15 basis point cut to 2.79% p.a. (3.65% p.a. comparison rate*)
It's important to note that some of these home loans are discounted by up to 45 basis points as a 'special offer', which means the offer can be withdrawn at any time.
Other rate cuts
Numerous other banks and lenders cut home loan rates in the past week, with the more noteworthy ones being:
AMP cut home loan rates on a variety of products and was one of the few to give love to variable home loans.
AMP cut variable rates by up to 25 basis points, with one of them being the Essential Home Loan 80% 100k product, as a 'special offer', down to 2.77% p.a. (2.80% p.a. comparison rate*).
As usual, special offers can be withdrawn at any time.
The bank that promises to 'bank responsibly' made a massive cut by 105 basis points in the past week.
This was applied to quite a few home loans, including the Basic Fixed 1 Year 80% LVR loan, down to 2.34% p.a. (3.17% p.a. comparison rate*).
Bananacoast Credit Union cut by up to 66 basis points.
This was applied to its Fixed Residential Loans for 2 and 3 Years, paying P&I. The rates are:
- 2 Years Fixed: 2.25% p.a. (3.80% p.a. comparison rate*)
- 3 Years Fixed: 2.27% p.a. (3.66% p.a. comparison rate*)
Other loans to receive cuts were its 'OMG' range of products for both owner occupiers and investors: yes - 'Oh My God'.
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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