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The state of play post-RBA

The state of play post-RBA

None of the big four banks have committed to passing on Tuesday’s RBA rate cut to their variable customers, leaving millions of mortgage holders out in the cold.

CBA, Westpac, NAB and ANZ instead played a game of cat and mouse with their announcements, hurdling each other at the finish line to offer the new lowest fixed rates. 

As a result Westpac, and its subsidiaries St George and Bank of Melbourne, now have the lowest fixed home loan rate in the country at 1.89 per cent for four years. (Note: These rates are for people with larger deposits which attract a discount of up to 0.10 per cent. The rates announced by Westpac yesterday were based on an 80 per cent LVR). 

Big four banks – lowest owner-occupier fixed 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%

2.69%

2.79%

2.29%

Source: RateCity.com.au. Note: Westpac's rates are for a LVR of 70%. St George and Bank of Melbourne rates are for an LVR of 60%.

RateCity.com.au research director, Sally Tindall, said the majority of banks have now failed to pass on the last two RBA rate cuts. 

“Most existing variable rate customers have missed out on a total rate cut of half a per cent this year,” she said.

“Governor Lowe had said a rate reduction would help address problem loans, but the banks’ refusal to pass on these cuts means people in financial strife aren’t likely to be getting any rate relief.

“Instead they’re stuck in mortgage prison clocking up an almighty interest bill. 

“Anyone lucky enough to be in a position to refinance who missed out on a rate cut should snub their bank back by taking their mortgage walking.

“This latest round of so called ‘cuts’ from the banks confirms loyalty is dead and buried.

“If the average owner occupier switched to one of the lowest rates on the market they could potentially save over $20,000 in the first five years of refinancing. 

“What we know now is that variable rates aren’t going to drop by themselves. If you want rate relief, you have to take action yourself,” she said.

How much homeowners could save by refinancing

Savings after 1 yearSavings after 5 years
Refinancing to the lowest variable rate (1.77%)

$4,140

$24,977

Refinancing to the lowest fixed rate (1.89% for 4 yrs)

$7,290

$20,303

Notes: Based on an owner occupier paying principal and interest with a $400K loan balance refinancing 5 years into a 30 year loan. The existing customer rate is 3.16%. Assumes the fixed rate reverts to the discounted variable rate after the 4th yr. LVR requirements apply. Cost is based on interest paid, fees and sign up bonus offered.

Lowest ongoing variable rates on RateCity.com.au

LenderRate
Reduce Home Loans1.77%
Homestar Finance1.79%
Pacific Mortgage Group1.89%

Note: the above loans all require a loan-to-value ratio of under 60%.

Lowest 1 year fixed rates on RateCity.com.au

LenderRate
Homestar Finance1.98%
Westpac/ St George/ Bank of Melbourne*1.99%
Greater Bank1.99%

Lowest 2 year fixed rates on RateCity.com.au

LenderRate
Westpac/ St George/ Bank of Melbourne*1.99%
Illawarra Credit Union1.99%
Hume Bank2.04%

Lowest 3 year fixed rates on RateCity.com.au

LenderRate
Bank First1.99%
Westpac/ St George/ Bank of Melbourne*1.99%
Homestar Finance2.06%

Lowest 4 year fixed rates on RateCity.com.au

LenderRate
Westpac/ St George/ Bank of Melbourne*1.89%
NAB1.98%
CBA1.99%

Lowest 5 year fixed rates on RateCity.com.au

LenderRate
ANZ2.29%
Citi2.39%
BankVic / Virgin Money2.49%

Source: RateCity.com.au. *Westpac Group rates are for loans with a loan-to-value ratio of under 70%.

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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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