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RBA remains on hold – have home loan rates hit the bottom?

RBA remains on hold – have home loan rates hit the bottom?

The RBA is expected to keep rates on hold today as analysis of the home loan market indicates rates may be inching closer to the bottom of the cycle.

After the November RBA cash rate change, there was a flurry of mostly fixed rate cuts, however, in 2021 the cuts are no longer coming thick and fast.

RateCity.com.au database analysis:

  • 17 lenders have cut 230 home loan rates since Jan 1.
  • 6 lenders have hiked 33 home loan rates since Jan 1.
  • 53 lenders have home loan rates under 2%, including three of the big four banks.
  • 1.75% is the lowest 3-year-fixed rate.
  • 1.77% is the lowest variable rate.

RateCity.com.au research director, Sally Tindall, said: “We could see one or two lenders challenge the current lowest rate, but the cuts have slowed considerably.”

“It’s likely we’re nearing the bottom of the cycle, provided the economic recovery stays on track and the RBA can keep the cash rate above zero, as planned,” she said.

“A handful of lenders have hiked new customer rates since the beginning of the year, however they’re still in the minority. We expect new customer rates will stay low and competitive throughout 2021 as people flock back to the property market.”

RateCity.com.au data shows there are 53 lenders offering a total of 139 home loan rates under 2 per cent.

“Lenders aren’t handing out these record low rates to everyone – they’re largely reserved for new customers. Even then, you often have to be an owner occupier with a decent amount of equity in your home,” she said.

“The latest ABS Lending Indicator data shows 237,632 people have refinanced since the start of COVID, however, last month’s figures are down considerably from the May 2020 peak.

“There are still likely to be hundreds of thousands of home-owners that can significantly benefit from refinancing, or, at the very least, by picking up the phone to their own bank,” she said.

Lowest fixed rates on RateCity.com.au

Fixed termLenderAdvertised rate
1-yearTic Toc, Greater Bank, RACQ, Hume Bank1.89%
2-yearHSBC, Homestar Finance1.88%
3-yearUBank1.75%
4-yearWestpac, St George, Bank of Melbourne1.89%
5-yearAussie1.99%

Source: RateCity.com.au

Lowest variable rates on RateCity.com.au

LenderProductAdvertised rate
Reduce Home LoansRate Cutter1.77%
Homestar FinanceStar Gold1.79%
Pacific Mortgage GroupStandard Variable1.89%

Source: RateCity.com.au Note: Above rates are for owner-occupiers paying principal and interest with a loan-to-value ratio of 60% or less.

Big four banks – lowest owner-occupier rates 

CBAWestpacNAB ANZ
1 year fixed

2.19%

1.99%

2.19% 

2.09%

2 year fixed

2.14%

1.99%

2.09%

2.09%

3 year fixed

2.14%

1.99%

2.09%

2.09%

4 year fixed

1.99%

1.89%

1.98%

2.29%

5 year fixed

2.99%

2.19%

2.79%

2.29%

Lowest variable rate

2.69%

2.19% for 2 yrs then 2.69%

2.69%

2.72%

Source: RateCity.com.au

Note: Westpac's rates are for a loan to value ratio of 70%.

Note: The lending indicator data is from the ABS in original terms for owner-occupiers and investors, from April to December 2020, inclusive.

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This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

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