Challenger banks' home loan rates get a haircut ahead of RBA decision

author-avatar By on October 30, 2020
Challenger banks' home loan rates get a haircut ahead of RBA decision

Photo by Edgar Chaparro on Unsplash

Ahead of the Reserve Bank's cash rate decision next week, numerous challenger banks have cut home loan interest rates, with one cut by 125 basis points.

The Reserve Bank's (RBA) cash rate decision next Tuesday is widely tipped to be a slight cut from 25 basis points down to 10 basis points.

Throughout the past week, a few challenger brands have slashed home loan interest rates.

Gateway Bank cut its Construction Loan by 125 basis points down to 3.23% p.a. (3.29% p.a. comparison rate*).

Australian Unity cut numerous home loans, but most noteworthy was its 'Health Wealth Happiness' package home loan, fixed for one year paying P&I, cut by 20 basis points down to 2.24% p.a. (3.13% p.a. comparison rate*).

People's Choice Credit Union cut its residential 1 year fixed loan paying P&I, among others, by 25 basis points down to 2.29% p.a. (4.44% p.a. comparison rate*).

More rate cuts are below.

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.

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.

ME Bank also cut a couple of home loan rates, including its variable 'Flexible Member Package' home loan for owner occupiers paying P&I with a maximum LVR of 80%.

For those borrowing $700,000 or more, the rate was cut by 10 basis points down to 2.69% p.a. (3.14% p.a. comparison rate*).

QBANK cut its 'Classic Offer' with a maximum LVR of 80% by 5 basis points down to 2.69% p.a. (2.72% p.a. comparison rate*)

Earlier in the week, Westpac-owned St. George and Bank of Melbourne also slashed some home loan rates.

Focusing on St. George, the biggest cuts came to interest-only loans.

For example, its Basic Variable loan with a maximum LVR of 60% paying IO, was cut by 85 basis points down to 3.09% p.a. (3.11% p.a. comparison rate*)

The corresponding home loan but paying P&I was cut by 10 basis points down to 2.49% p.a. (2.51% p.a. comparison rate*).

Note these are 'promo' rates and could be withdrawn at any time.


Disclaimers

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.

*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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author-avatar
Harrison joined Savings in 2020. He is an experienced journalist, with previous stints at News Corp and financial comparison site Canstar. With a keen interest in personal finance, Harrison is passionate about helping consumers make more informed financial decisions.

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