Three of the big banks are offering rate cuts, with Westpac and NAB joining later
The Commonwealth Bank has made history as Australia’s first ever major bank to offer a mortgage rate of less than two per cent.
None of the big four banks announced a rate cut on Melbourne Cup day after the Reserve Bank of Australia trimmed the cash rate to a new record-low of 0.1 per cent.
Now three of the big banks are offering a mortgage rate of less than two per cent, with Westpac and NAB joining the party later.
ANZ belatedly cut its rate without matching its rivals as all the major banks trimmed their fixed rates on Wednesday but not their standard variable or investor loans.
This morning the Commonwealth Bank – Australia’s biggest home lender – announced it would slash its four-year fixed rate by one percentage point to an all-time low of 1.99 per cent for owner occupiers paying off a principal and interest Wealth Package loan.
This is CBA’s lowest ever advertised home loan rate, it said.
The huge mortgage reduction will see CBA borrowers with a median capital city mortgage of $500,000 save $260 a month in repayments, as they fall to $1,846.
As of noon, the Commonwealth Bank was the only big bank to have cut home loan rates.
Westpac, Australia’s second biggest bank, matched CBA three hours after its rival’s announcement by cutting its four-year, fixed interest rate by 0.8 percentage points to 1.99 per cent for owner-occupiers with a Premier Advantage Package loan.
National Australia Bank – another four hours later – cut its four-year fixed rate by 0.81 percentage points to 1.98 per cent – the lowest of the big four banks.
ANZ on late Wednesday afternoon announced it was follow the lead of its three major competitors and cut mortgage rates.
But with a one, two and three-year fixed rates of 2.09, it is the only bank that doesn’t have a fixed mortgage rate below two per cent, following cuts of 0.3 and 0.2 percentage points.
Traditionally, the big lenders compete with each other to be first to announce a rate cut on the same day as a Reserve Bank move.
But on Tuesday, only non-bank lenders bothered cutting their rates.
Shortly before the Reserve Bank’s historic rate cuts announcement, Homestar Finance’s Star Gold loan offered Australia’s lowest mortgage rate of 1.79 per cent for borrowers paying off principal and interest.
This standard variable loan, however, is only available for those who have a 40 per cent deposit, or a loan-to-value ratio of 60 per cent.
The title of cheapest home loan was beaten late on Tuesday afternoon as Reduce Home Loans cut its Rate Cutter Variable by ten percentage points to 1.77 per cent.
Pacific Mortgage Group cut by ten percentage points to 1.89 per cent its standard variable loan for those with a 40 per cent deposit.
For those with a 20 per cent deposit, Homestar has cut its variable rate by 0.15 percentage points to 2.14 per cent.
The Commonwealth Bank also reduced rates on its other home loans, cutting by 15 percentage points its two and three-year fixed rates to 2.14 per cent for owner occupiers paying principal and interest.
Equivalent one-year fixed rates were reduced by 10 percentage points to 2.19 per cent.
CBA’s shorter-term fixed rate loans are low but still above two per cent as the Reserve Bank of Australia engages in quantitative easing, a radical policy where it buys government bonds from the banks in a bid to inject money into the financial system to encourage borrowing.