Mortgage Competition Heats Up: Australian Banks Cut Home Loan Rates to Win Borrowers

Australian home-loan borrowers are seeing an encouraging development: competition between lenders is intensifying, with dozens of banks reducing variable mortgage rates despite the RBA cash rate remaining at 4.35%.

ABC News reported on 14 September that Commonwealth Bank reduced rates across a range of mortgage products in late June, followed by ANZ and Westpac, while Macquarie made reductions in July. Mortgage brokers told the ABC that dozens of banks have lowered variable rates over the past month as lenders compete harder for a smaller pool of new borrowers.

Finder data cited by the ABC showed some of the most competitive variable rates starting at approximately 5.69%, while competitive fixed rates were around 5.8%–6%, depending on the term and borrower circumstances.

That is particularly relevant for Perth homeowners because an RBA rate change isn’t the only way mortgage costs can change.

When banks compete aggressively for customers, borrowers may have opportunities to negotiate with their existing lender or investigate refinancing to another lender. Importantly, the lowest advertised rate isn’t automatically the best loan: eligibility, loan-to-value ratio, fees, features, offset facilities and refinancing costs can materially affect the overall outcome.

Existing customers should pay particular attention. The ABC reported that lenders often reserve particularly competitive pricing for new customers rather than automatically offering the same deal to established borrowers.

For someone with a sizeable mortgage, even a modest rate difference can potentially affect repayments and total interest significantly over time.

The RBA’s next monetary-policy decision is scheduled for 29 September, and economists quoted by the ABC expect another rate rise may occur later this year. That makes comparing the actual offers available in today’s competitive lending market particularly worthwhile rather than simply waiting for the RBA.

Naga Mortgage Brokers can help Perth homeowners, buyers and investors compare available home-loan options and determine whether their current mortgage remains competitive.

General information only. Lending criteria, eligibility, fees and charges apply.