Citi is gutting home loan rates by as much as 160 basis points

William Jolly By on August 23, 2019

Photo source: Flickr

Citibank will be slashing mortgage rates across its entire home loan product suite from Monday 26 August, with certain rates to be cut by as much as 160 basis points.

That 160 basis point interest rate cut will apply to Citi’s fixed owner-occupied P&I home loans, with fixed home loans to start from 2.99% p.a. (4.61% p.a. comparison rate).

Citi’s variable owner-occupied P&I home loans will be cut by up to 93 basis points, and will start from a new rate of 3.21% p.a. (3.26% p.a. comparison rate), which is enough to make these rates quite competitive in the market.

For investment home loans, variable investment P&I rates will be cut by up to 100 basis points and will start from rates of 3.54% p.a. (3.66% p.a. comparison rate), and fixed investment P&I interest rates are being reduced by as much as 150 basis points, starting from a new rate of 3.49% p.a. (3.90% p.a. comparison rate).

Interest-only loans are being changed too. Citi’s variable, interest-only investment loans will be cut by up to 100 basis points to a new rate of 3.74% p.a. (3.88% p.a. comparison rate) while fixed interest-only investment loans will be cut by up to 150 basis points as well, starting from 3.69% p.a. (4.89% p.a. comparison rate).

According to a note Citi sent to brokers, the rates above are quoted for loan amounts of $750,000 and over in New South Wales and Victoria and for $500,000 and over in all other States and Territories.

Loans below $750,000 and $500,000 will require an additional 0.20% p.a. loading.

A Citi spokesperson told “it is a business priority for Citi to continue to grow in the mortgages space.”

“Citi’s changes to its interest rates reflect our commitment to having a competitive offering,” the spokesperson said.

Looking for a low variable rate home loan? The table below displays owner-occupier products which may represent the best of the big four banks, best of the top 10 customer-owned banks and the best of the larger non-banks. 

Provider Ad rate
Comp rate*
Purchase or Refi, P&I 80% Smart Home Loan 2.88% 2.90% $1,660 More details
Low Rate Home Loan w/Offset 2.90% 2.92% $1,665 More details
Base Variable Rate Special P&I 3.20% 3.20% $1,730 More details
Ad rate
Comp rate*
Purchase or Refi, P&I 80% Smart Home Loan
2.88% 2.90% $1,660
More details
Low Rate Home Loan w/Offset
2.90% 2.92% $1,665
More details
Base Variable Rate Special P&I
3.20% 3.20% $1,730
More details

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%. 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 18 November 2019. View disclaimer.

These are some significant rate cuts from Citi and have the potential to affect a broad number of people.

Citi is the 13th biggest home-lender in Australia according to APRA’s monthly banking statistics, with more than $7.2 billion in housing loans across owner-occupier and investment properties.

The news of Citi’s impending rate cuts follow yesterday’s news of Westpac and it’s related subsidiaries (St. George, Bank of Melbourne and BankSA) cutting fixed-rate home loans by as much as 135 basis points.

Yet demand for fixed-rate home loans has continued to fall in recent months, which might be why these large institutions are gutting their fixed home loan rates by so much.

According to the latest data from Mortgage Choice, demand for fixed-rate mortgages fell to 14% in July, with CEO Susan Mitchell saying borrowers are still reluctant to fix due to expectations of further Reserve Bank rate cuts.

“It’s not entirely surprising that borrowers are choosing to keep their options open by opting for variable rate home loans. The reality is, the opportunity to save on repayments if the Reserve Bank cuts the cash rate is too good to pass up.

“In the minutes of the RBA Board’s August meeting released yesterday, members judged it reasonable to expect that an extended period of low-interest rates would be required and suggested that further easing of monetary policy may be on the cards.”


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 2018. 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.

In the interests of full disclosure, and are part of the Firstmac Group. To read about how manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate includes both the interest rate and the fees and charges relating to a loan, combined into a single percentage figure. The interest rate per annum is based on a loan credit of $150,000 and a loan term of 25 years.

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William Jolly
William Jolly joined as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.
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