Australians gearing up to take out home loans have something to celebrate.
Some of the nation’s biggest banks recently slashed their fixed-term home loans, which is great news for those looking to start the property ownership journey.
It’s not just would-be homeowners who will be in high spirits thanks to low rates – existing property owners may consider ditching variable loans in favour of a fixed-term loan.
Commonwealth Bank offers low interest rate
The Commonwealth Bank of Australia (CBA) slashed its five year fixed-rate home loan to 4.99 percent per annum on July 23.
This marks the first time the CBA has offered a rate below five percent for such loan specifications. New and existing CBA customers are already able to jump aboard the cheap home loan bandwagon if they want to make the most of the rate.
“This is a great opportunity for customers to lock in an extremely competitive rate for five years,” explained Lyn Cobley, CBA executive general manger for Retail Products and Third Party.
Westpac customers also winners
Westpac has also dropped its five year fixed-rate home loan to a smooth 4.99 percent as of July 28 – showing how a bit of inter-bank competition can result in better deals for consumers.
“Our aim is to be competitive at the same time as being able to provide certainty to customers for whom a fixed-rate home loan suits their particular circumstances. It also allows them to plan for the future as they look to own their home sooner and this is one way that we can help them do that,” stated Gai McGrath, Westpac general manger of Retail Banking.
National Australia Bank and ANZ join the big four rates war
National Australia Bank (NAB) has lowered its five year fixed-rate home loan to 4.99 percent, in line with its big bank competitors. And are also offering a 4.94 percent rate for its three year fixed-rate home loan.
ANZ has since reduced its five-year fixed home loan rate down 0.30 percentage points to 5.49 percent.
New research by RateCity has revealed that all of the major banks have recently been losing ground to the smaller lenders, collectively they lost 0.37 percent market share in the 12 months to May 2014, a likely motivator for the historically low interest rates we are now seeing.
How to find the best deal
With all this competition between the big banks, Australians looking to jump on the property ladder may find their real estate goals reachable. Running a home loan comparison is prudent, as smaller lenders are also able to undercut the bigger players.
“With the scare of the GFC behind us, people are feeling more confident shopping around outside of the Big Four,” Alex Parsons, CEO of RateCity.com.au, said.
“People are getting smarter with their money and, as cost of living pressures bite, realising that paying a higher rate is a waste of money.
“This latest round of rate cutting is evidence that the majors are starting to feel the pinch of the shift in the market and are having to meet the market. The real winners from this competition will be consumers who will be able to materially reduce their costs of borrowing if they understand and compare the different offerings in the market.”