Rates hit rock bottom as smaller lenders hit the 3's


Laine Gordon

Laine Gordon

May 10, 2016( 4 min read )

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May 10, 2016: Almost a quarter of all lenders have now confirmed they will be cutting their variable rates for Australian home owners, with some of the smaller lenders offering up never seen before rates as low as 3.61 per cent.

Homestar Finance has reduced its lowest variable rate to just 3.61 per cent (comparison rate of 3.65 per cent) while Reduce Home Loans’ lowest offering is now 3.65% (comparison rate of 3.66%).

Both lenders’ new rates are effective immediately for both new and existing customers.

Sally Tindall, money editor at RateCity.com.au, said that rates under 4 per cent would become increasingly more common.

“Right now there are almost 20 lenders offering rates for owner-occupiers under 4 per cent, with some reducing their lowest variables to never seen before lows,” she said.

“If the RBA decides to cut again, we’re likely to see rock-bottom home loan interest rates of under 3.5 per cent, while rates under 4 per cent will become the new norm.

“Any owner-occupier paying over the 4.5 per cent mark would have to seriously question the product they are on.”

While a number of lenders were making history with their record-busting rates, there are still around 70 lenders yet to declare their hand.

“Some lenders are still being extremely tight-lipped about whether or not they’ll pass on this cut,” she said.

“If they choose not to cut, customers deserve to know so they can decide whether they want to look for a better deal.”

To see a live list of lenders who have cut rates click here.

The Shakers:

Five of the lowest advertised ongoing variable rates

Lender

New lowest rate

Comparison Rate

Effective date

Home Star

3.61%

3.65%

5/05/2016*

Loans.com.au

3.63%

4.03%

05/05/2016*

Mortgage House

3.64%

3.64%

27/05/2016^

Reduce home loans

3.65%

3.66%

5/05/2016

Pacific Mortgage Group

3.70%

3.70%

17/05/2016

* New rates efffective now for new customers and at a later date for existing customers

^ this product requires an LVR of 30%

The Movers:

Company

Cut

Effective Date

Notes

AMP Bank

0.20%

20/05/2016

 

ANZ

0.19%

13/05/2016

 

Australian Military Bank

0.25%

27/06/2016

 

Auswide Bank

0.20%

25/05/2016

Investors only receive 0.15% cut

Bank of Melbourne

0.25%

23/05/2016

 

BankSA

0.25%

23/05/2016

 

BankVic

0.25%

16/05/2016

 

Bankwest

0.20%

20/05/2016

 

Bendigo Bank

0.20%

30/05/2016

Investors only receive 0.15% cut

BOQ

0.25%

18/05/2016

 

Coastline Credit Union

0.25%

16/05/2016

 

Commonwealth Bank

0.25%

20/05/2016

 

CUA

0.25%

19/05/2016

Investors only receive 0.20% cut

Firstmac

0.25%

23/05/2016

 

Greater Bank

0.25%

9/05/2016

 

Heritage Bank

0.20%

23/05/2016

 

Homestar Finance

0.25%

5/05/2016

 

HSBC

0.25%

23/05/2016

 

IMB

0.25%

25/05/2016

Investors only receive 0.20% cut

ING DIRECT

0.25%

20/05/2016

 

loans.com.au

0.25%

4/05/2016

 

Mortgage House

0.25%

6/05/2016

Start date for existing customers 27 May

NAB

0.25%

16/05/2016

 

Newcastle Permanent

0.25%

19/05/2016

 

P&N Bank

0.14%

5/05/2016

 

Pacific Mortgage Group

0.25%

16/05/2016

 

QPCU

0.25%

23/05/2016

 

RAMS

0.25%

23/05/2016

 

Reduce Home Loans

0.20%

5/05/2016

 

St.George Bank

0.25%

23/05/2016

 

Suncorp Bank

0.20%

25/05/2016

Investors only receive 0.15% cut

UBank

0.25%

16/05/2016

 

Westpac

0.25%

23/05/2016

 

Yellow Brick Road

0.25%

9/05/2016

Interest only loans from 0.10% cut

Your Credit Union

0.25%

1/06/2016

 

^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.

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