The lenders that are cutting home loan rates so far

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

Savings over

Select a number of years to see how much money you can save with different home loans over time.

e.g. To see how much you could save in two years by switching mortgages,  set the slider to 2.

How can I get ANZ home loan pre-approval?

Shopping for a new home is an exciting experience and getting a pre-approval on the loan may give you the peace of mind that you are looking at properties within your budget. 

At the time of applying for the ANZ Bank home loan pre-approval, you will be required to provide proof of employment and income, along with records of your savings and debts.

An ANZ home loan pre-approval time frame is usually up to three months. However, being pre-approved doesn’t necessarily mean you will get your home loan. Other factors could lead to your home loan application being rejected, even with a prior pre-approval. Some factors include the property evaluation not meeting the bank’s criteria or a change in your financial circumstances.

You can make an application for ANZ home loan pre-approval online or call on 1800100641 Mon-Fri 8.00 am to 8.00 pm (AEST).

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.

Monthly Repayment

Your current monthly home loan repayment. To accurately calculate how much you could save, an accurate payment figure is required. If you are not certain, check your bank statement.

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

Interest Rate

Your current home loan interest rate. To accurately calculate how much you could save, an accurate interest figure is required. If you are not certain, check your bank statement or log into your mortgage account.

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 is a variable home loan?

A variable rate home loan is one where the interest rate can and will change over the course of your loan. The rate is determined by your lender, not the Reserve Bank of Australia, so while the cash rate might go down, your bank may decide not to follow suit, although they do broadly follow market conditions. One of the upsides of variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts.

What is the difference between a fixed rate and variable rate?

A variable rate can fluctuate over the life of a loan as determined by your lender. While the rate is broadly reflective of market conditions, including the Reserve Bank’s cash rate, it is by no means the sole determining factor in your bank’s decision-making process.

A fixed rate is one which is set for a period of time, regardless of market fluctuations. Fixed rates can be as short as one year or as long as 15 years however after this time it will revert to a variable rate, unless you negotiate with your bank to enter into another fixed term agreement

Variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts however fixed rates do offer customers a level of security by knowing exactly how much they need to set aside each month.

What is a comparison rate?

The comparison rate is a more inclusive way of comparing home loans that factors in not only on the interest rate but also the majority of upfront and ongoing charges that add to the total cost of a home loan.

The rate is calculated using an industry-wide formula based on a $150,000 loan over a 25-year period and includes things like revert rates after an introductory or fixed rate period, application fees and monthly account keeping fees.

In Australia, all lenders are required by law to publish the comparison rate alongside their advertised rate so people can compare products easily.

How long should I have my mortgage for?

The standard length of a mortgage is between 25-30 years however they can be as long as 40 years and as few as one. There is a benefit to having a shorter mortgage as the faster you pay off the amount you owe, the less you’ll pay your bank in interest.

Of course, shorter mortgages will require higher monthly payments so plug the numbers into a mortgage calculator to find out how many years you can potentially shave off your budget.

For example monthly repayments on a $500,000 over 25 years with an interest rate of 5% are $2923. On the same loan with the same interest rate over 30 years repayments would be $2684 a month. At first blush, the 30 year mortgage sounds great with significantly lower monthly repayments but remember, stretching your loan out by an extra five years will see you hand over $89,396 in interest repayments to your bank.

How long does NAB home loan approval take?

The time required to get your home loan from NAB approved can vary based on a number of factors involved in the application process. 

Once you have applied for a home loan, a NAB specialist will contact you within 24 hours over the phone to take down relevant information, including your total income, debts (existing loans, credit cards, etc.), assets (car, shares, etc.), and your monthly expenses (food, utility bills, etc.). Your lender might also ask for information related to the property you want to purchase, including the type of dwelling and preferred postcode.

NAB will then verify all your information and check your credit score, and if the details stack up, you should be given a conditional approval certificate. This certificate stipulates how much money NAB is willing to lend you and is typically valid for 90 days. 

Once you have your conditional approval, you can start browsing for properties that you like and that fit within the budget that NAB has provided. After you find a suitable property, you’ll need to give a copy of the signed deed to NAB, following which you should get full approval and access to the funds. This process can take up to 4-6 weeks. 

Can I take a personal loan after a home loan?

Are you struggling to pay the deposit for your dream home? A personal loan can help you pay the deposit. The question that may arise in your mind is can I take a home loan after a personal loan, or can you take a personal loan at the same time as a home loan, as it is. The answer is that, yes, provided you can meet the general eligibility criteria for both a personal loan and a home loan, your application should be approved. Those eligibility criteria may include:

  • Higher-income to show repayment capability for both the loans
  • Clear credit history with no delays in bill payments or defaults on debts
  • Zero or minimal current outstanding debt
  • Some amount of savings
  • Proven rent history will be positively perceived by the lenders

A personal loan after or during a home loan may impact serviceability, however, as the numbers can seriously add up. Every loan you avail of increases your monthly installments and the amount you use to repay the personal loan will be considered to lower the money available for the repayment of your home loan.

As to whether you can get a personal loan after your home loan, the answer is a very likely "yes", though it does come with a caveat: as long as you can show sufficient income to repay both the loans on time, you should be able to get that personal loan approved. A personal loan can also help to improve your credit score showing financial discipline and responsibility, which may benefit you with more favorable terms for your home loan.

How to break up with your mortgage broker

If you find a mortgage broker giving you generic advice or trying to sell you a competitive offer from an unsuitable lender, you might be better off  breaking up with the mortgage broker and consulting someone else. Breaking up with a mortgage broker can be done over the phone, or via email. You can also raise a complaint, either with the broker’s aggregator or with the Australian Financial Complaints Authority as necessary.

As licensed industry professionals, mortgage brokers have the responsibility of giving you accurate advice so that you know what to expect when you apply for a home loan. You may have approached the mortgage broker, for instance, because you have questions about the terms of a home loan a lender offered you. 

You should remember that mortgage brokers are obliged by law to act in your best interests and as part of complying with The Australian Securities and Investments Commission’s (ASIC) regulations. If you feel you didn’t get the right advice from the mortgage broker, or that you lost money as a result of accepting the broker’s suggestions regarding a lender or home loan offer, you can file a complaint with the ASIC and seek compensation. 

When you first speak to a mortgage broker, consider asking them about their Lender Panel, which is the list of lenders they usually recommend and who may pay them a commission. This information can help you decide if the advice they give you has anything to do with the remuneration they may receive from one or more lenders.