The lenders that are cutting home loan rates so far

More than 50 lenders have committed to reducing variable rates on home loans, three days after the Reserve Bank of Australia slashed the official cash rate to a new record low of 0.50 per cent.

Of the 55 that have announced rate cuts, 47, including the big four, intend to pass on the full cut of 0.25 basis points, likely due to political pressure from Prime Minister Scott Morrison.

This is in stark contrast to the previous cut in October 2019, where only 16 of the 66 lenders that lowered their rates passed on the full cut.

After the October cut, the big four banks only passed on an average of 0.14 per cent to their owner-occupier customers on variable rate loans, RateCity research shows. This average dropped from 0.21 per cent after the July cut and 0.22 per cent following the June cut.

Notably, several banks intend to pass on a cut of 0.25 per cent or more for investor customers only, suggesting some lenders may be ramping up efforts to chase business from investors.

For example, ANZ has announced it will pass on the full cut to owner-occupiers but a bigger cut of 0.35 per cent for investors on interest-only mortgages.

The lenders that have announced cuts to owner-occupier home loan rates

Lender Rate cut for variable home loans (%) Notes Date effective
86 400 -0.25   March 4th
Adelaide Bank -0.25   March 27th
AMP Bank -0.25   March 13th
ANZ -0.25 -0.25 for owner-occupier P&I and interest-only, plus investor P&I March 13th
Athena Home Loans -0.25   March 3rd
Australian Military Bank -0.25   March 26th
Auswide Bank -0.25   March 5th and 27th (depending on loan)
Bank Australia -0.25   March 24th
Bank First -0.25   March 25th
Bank of Melbourne -0.25   March 17th
Bank of Queensland -0.17   April 3rd
BankSA -0.25   March 17th
BankVic -0.25   March 5th
Bankwest -0.25   March 18th
BCU -0.25   March 1st
Bendigo Bank -0.25   March 27th
Citi -0.25   March 24th
Coastline Credit Union -0.25   March 1st
Commonwealth Bank of Australia -0.25   March 24th
Community First Credit Union -0.10   March 30th
CUA -0.25   March 24th
Defence Bank -0.25   March 12th
Firstmac -0.25 Existing customers only March 26th
Freedom Lend -0.25 -0.25 in general, -0.20 for special loans March 3rd
Greater Bank -0.25 Existing customers only March 23rd
Heritage Bank -0.20   March 25th
Homestar Finance -0.25   March 3rd
HSBC -0.25   March 23rd
Hume Bank -0.20 Existing customers only March 18th
Hunter United -0.15   March 13th
IMB Bank -0.25   March 24th
ING -0.25   March 18th
Liberty Financial -0.25   March 24th -0.25 Existing customers only March 26th
Macquarie Bank -0.25   March 19th
ME Bank -0.25 Existing customers only March 26th
MyState Bank -0.25   March 31st
NAB -0.25   March 13th
Newcastle Permanent -0.25   March 24th
P&N Bank -0.25   March 20th
People's Choice Credit Union -0.25 Existing members only March 17th
Pepper Money -0.25 Existing customers only March 16th
Qudos Bank -0.25   March 23rd
RACQ Bank -0.17   TBC
RAMS -0.25   March 17th
Reduce Home Loans -0.25 TBC for existing customers March 3rd
Resimac -0.25 Existing customers only March 26th
St George Bank -0.25   March 17th
Suncorp Bank -0.25   March 20th
The Capricornian -0.20 Cut applies to Standard Variable Loans only March 23rd
The Mutual -0.25   March 16th
UBank -0.25   April 3rd
Virgin Money -0.17   April 3rd
Westpac -0.25   March 17th
Yard -0.25   March 5th

*Data correct as of 3pm, March 6th 2020.

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Learn more about home loans

How much of the RBA rate cut do lenders pass on to borrowers?

When the Reserve Bank of Australia cuts its official cash rate, there is no guarantee lenders will then pass that cut on to lenders by way of lower interest rates. 

Sometimes lenders pass on the cut in full, sometimes they partially pass on the cut, sometimes they don’t at all. When they don’t, they often defend the decision by saying they need to balance the needs of their shareholders with the needs of their borrowers. 

As the attached graph shows, more recent cuts have seen less lenders passing on the full RBA interest rate cut; the average lender was more likely to pass on about two-thirds of the 25 basis points cut to its borrowers.  image002

How do I know if I have to pay LMI?

Each lender has its own policies, but as a general rule you will have to pay lender’s mortgage insurance (LMI) if your loan-to-value ratio (LVR) exceeds 80 per cent. This applies whether you’re taking out a new home loan or you’re refinancing.

If you’re looking to buy a property, you can use this LMI calculator to work out how much you’re likely to be charged in LMI.

What happens to my home loan when interest rates rise?

If you are on a variable rate home loan, every so often your rate will be subject to increases and decreases. Rate changes are determined by your lender, not the Reserve Bank of Australia, however often when the RBA changes the cash rate, a number of banks will follow suit, at least to some extent. You can use RateCity cash rate to check how the latest interest rate change affected your mortgage interest rate.

When your rate rises, you will be required to pay your bank more each month in mortgage repayments. Similarly, if your interest rate is cut, then your monthly repayments will decrease. Your lender will notify you of what your new repayments will be, although you can do the calculations yourself, and compare other home loan rates using our mortgage calculator.

There is no way of conclusively predicting when interest rates will go up or down on home loans so if you prefer a more stable approach consider opting for a fixed rate loan.

What happens when you default on your mortgage?

A mortgage default occurs when you are 90 days or more behind on your mortgage repayments. Late repayments will often incur a late fee on top of the amount owed which will continue to gather interest along with the remaining principal amount.

If you do default on a mortgage repayment you should try and catch up in next month’s payment. If this isn’t possible, and missing payments is going to become a regular issue, you need to contact your lender as soon as possible to organise an alternative payment schedule and discuss further options.

You may also want to talk to a financial counsellor. 

How personalised is my rating?

Real Time Ratings produces instant scores for loan products and updates them based what you tell us about what you’re looking for in a loan. In that sense, we believe the ratings are as close as you get to personalised; the more you tell us, the more we customise to ratings to your needs. Some borrowers value flexibility, while others want the lowest cost loan. Your preferences will be reflected in the rating. 

We also take a shorter term, more realistic view of how long borrowers hold onto their loan, which gives you a better idea about the true borrowing costs. We take your loan details and calculate how much each of the relevent loans would cost you on average each month over the next five years. We assess the overall flexibility of each loan and give you an easy indication of which ones are likely to adjust to your needs over time. 

How often is your data updated?

We work closely with lenders to get updates as quick as possible, with updates made the same day wherever possible.

How can I get a home loan with no deposit?

Following the Global Financial Crisis, no-deposit loans, as they once used to be known, have largely been removed from the market. Now, if you wish to enter the market with no deposit, you will require a property of your own to secure a loan against or the assistance of a guarantor.

What is 'principal and interest'?

‘Principal and interest’ loans are the most common type of home loans on the market. The principal part of the loan is the initial sum lent to the customer and the interest is the money paid on top of this, at the agreed interest rate, until the end of the loan.

By reducing the principal amount, the total of interest charged will also become smaller until eventually the debt is paid off in full.

How common are low-deposit home loans?

Low-deposit home loans aren’t as common as they once were, because they’re regarded as relatively risky and the banking regulator (APRA) is trying to reduce risk from the mortgage market.

However, if you do your research, you’ll find there is still a fairly wide selection of banks, credit unions and non-bank lenders that offers low-deposit home loans.

How do I take out a low-deposit home loan?

If you want to take out a low-deposit home loan, it might be a good idea to consult a mortgage broker who can give you professional financial advice and organise the mortgage for you.

Another way to take out a low-deposit home loan is to do your own research with a comparison website like RateCity. Once you’ve identified your preferred mortgage, you can apply through RateCity or go direct to the lender.

What is an ombudsman?

An complaints officer – previously referred to as an ombudsman -looks at formal complaints from customers about their credit providers, and helps to find a fair and independent solution to these problems.

These services are handled by the Australian Financial Complaints Authority, a non-profit government organisation that addresses and resolves financial disputes between customers and financial service providers.

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

Do other comparison sites offer the same service?

Real Time RatingsTM is the only online system that ranks the home loan market based on your personal borrowing preferences. Until now, home loans have been rated based on outdated data. Our system is unique because it reacts to changes as soon as we update our database.

How does Real Time Ratings work?

Real Time RatingsTM looks at your individual home loan requirements and uses this information to rank every applicable home loan in our database out of five.

This score is based on two main factors – cost and flexibility.

Cost is calculated by looking at the interest rates and fees over the first five years of the loan.

Flexibility is based on whether a loan offers features such as an offset account, redraw facility and extra repayments.

Real Time RatingsTM also includes the following assumptions:

  • Costs are calculated on the current variable rate however they could change in the future.
  • Loans are assumed to be principal and interest
  • Fixed-rate loans with terms greater than five years are still assessed on a five-year basis, so 10-year fixed loans are assessed as being only five years’ long.
  • Break costs are not included.