AMP the headline in quiet week for home loan rate movement
It's been the first week for a little while to not bring much news on the home loan front.
Despite no change to the RBA cash rate since November last year, there have been some big shifts in the Australian mortgage market over the past few months.
Lower medium term bond yields allowed lenders to offer lower home loan rates, particularly for fixed terms.
As Warren Hogan told the Savings Tip Jar podcast in late August, Australia saw a significant drop in bond yields which allows lenders to fund loans at a lower price in the wholesale market.
"Three year government bond yields [are] the benchmark three year interest rate in the market...[they] fell pretty dramatically since the slightly weaker [Q2 inflation numbers]," he told the podcast.
"The three year yield was hovering over 4%, which is about the right level when your cash rate's at 4.35%, and then it collapsed and fell all the way down to 3.4%...and really held at 3.5, 3.6%."
The home loan rate cuts continued throughout the start of spring, but the tide has slowed recently, with the three year yield on Australian Government bonds back near 4% as of 24 October.
This might suggest that investors are starting to expect longer delays until rate cuts - which RBA boss Michele Bullock has said all along is the likeliest outcome.
As it stands, markets are pricing in the chances of yet another hold from the RBA on 5 November at 93%.
In any case, here were the home loan rate changes in the Australian market this week.
AMP altered variable rates up to 10 bps
| Product | Interest Rate Change |
|---|---|
| Investment Essential Home Loan ≤60%, $750k+ (LVR 0.01-60%) | Down 10 bps to 6.39% p.a. (6.42% p.a. comparison rate*) |
| Investment Essential Home Loan 60-80%, $750k+ (LVR 60.01-80%) | Down 5 bps to 6.44% p.a. (6.47% p.a. comparison rate*) |
| Investment Essential Home Loan 80-90% (LVR 80.01-90%) | Up 10 bps to 6.59% p.a. (6.62% p.a. comparison rate*) |
| Professional Package Owner Occupied P&I ≤60%, $500k-$1m (LVR 0.01-60%) | Up 5 bps to 6.24% p.a. (6.59% p.a. comparison rate*) |
| Professional Package Owner Occupied P&I 60-80%, $500k-$1m (LVR 60.01-80%) | Up 5 bps to 6.24% p.a. (6.59% p.a. comparison rate*) |
| Professional Package Owner Occupied P&I 80-90% + LMI, $500k-$1m (LVR 80.01-90%) | Up 5 bps to 6.44% p.a. (6.79% p.a. comparison rate*) |
| Professional Package Investment Variable P&I ≤60%, $500k-$1m (LVR 0.01-60%) | Up 5 bps to 6.39% p.a. (6.74% p.a. comparison rate*) |
| Professional Package Investment Variable P&I 60-80%, $500k-$1m (LVR 60.01-80%) | Up 5 bps to 6.44% p.a. (6.79% p.a. comparison rate*) |
| Professional Package Investment Variable P&I 80-90%, $500k-$1m (LVR 80.01-90%) | Up 5 bps to 6.59% p.a. (6.94% p.a. comparison rate*) |
The only sizeable bank to adjust home loan rates this week was AMP, with minor adjustments in either direction to variable rates.
AMP already cut fixed rates in September, but it's the first time for a while it has touched variable rates.
The rates on the Professional Package products, for both investors and owner occupiers, were bumped up 5 basis points, which while still pretty annoying for borrowers on these rates is unlikely to break the bank.
The Investment Essential Home Loan previously had a flat rate of 6.49% p.a. for all loan-to-value ratios (LVRs), with slightly different comparison rates, but this week's changes have differentiated between loan size.
Investors whose LVR is below 80% will benefit from a slight reduction in repayments, while if your loan is still above 80% you'll likely see your rate go up by 0.10%.
Other movers
- The Capricornian cut fixed rates up to 83 bps
- The Mac cut fixed rates for one and three year terms up to 0.40%.
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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 5.98% p.a. | $2,978 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.89% p.a. | 5.80% p.a. | $2,962 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 6.02% p.a. | $2,995 | Principal & Interest | Fixed | $0 | $0 | 60% |
| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
