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News.com.au
03-07-2025
- Business
- News.com.au
Data reveals huge home loan repayment gap between lenders
There is a $2000 monthly savings gap in the home loan market right now and that figure is set to grow. Data by comparison site Finder has revealed that while 111 lenders have passed on discounts to customers following the RBA's February and May rate cuts, some deals are far better than others. In fact, there is a difference of more than 4 per cent between the lowest current advertised variable rate in the market and the highest. For a borrower with a 20 per cent deposit, making principal and interest payments on an owner-occupied property, the lowest variable rate is 5.33 per cent, offered by Suncorp Bank's Back to Basics Home Loan. The highest is 9.89 per cent, with Mortgage House's Chameleon Platinum Home Loan. A borrower with an average Australian home loan of $640,000 would pay $3566 a month on the lowest rate, or $5565 on the highest. That's a difference of $1999 a month, adding up to $23,983 a year. For someone with a $1 million mortgage, the difference is $3123 a month and $37,414 a year. After Suncorp's 5.33 per cent, Pacific Mortgage Group is next with a 5.39 per cent offering, followed by Police Bank and Border Bank with 5.41 per cent. Interestingly, while it has the highest rate on the market, Mortgage House also has the fifth lowest, with its Chameleon Executive Home Loan (5.48 per cent). The savings gaps are likely to widen. With the RBA widely tipped to cut again on 8 July, experts believe we will soon see a rise in lenders passing on partial discounts, or no discount at all. Finder's head of consumer research Graham Cooke said the first two cuts this year were unique in that the majority of lenders passed them both on in full. 'We have not seen this as consistently before,' Cooke said. 'This means banks realise the cost of living pressure is high and there is a lot of social pressure on them to pass the full cut to customers. 'I expect that to continue if we get another cut, though maybe not if we get a fourth or fifth. Then we may see banks hold back.' Mortgage Choice broker James Algar says he would be 'surprised' if as many institutions passed on a July cut in full, but anticipated customers would hold their lenders to account. 'When interest rates are at the higher end, people tend to be more vigilant about the rates they're actually paying, Algar said. 'Right now, they're definitely engaged. 'We've had a groundswell of people happy to work with smaller lenders because they can get better deals. We're placing more business away from the bigger banks than we used to.' Algar pointed out that savings are not just about whether a discount is passed on, but also how long it takes a lender to do so. APRA statistics from May this year showed the residential mortgage portfolio size across the major banks was $1.723 trillion. This means the standard 10-day delay by lenders to pass on a 25 basis point rate cut cost their customers about $118 million in excess interest. 'If you have a 500,000 mortgage and it takes your lender a month to pass on a rate cut, that's $100 extra you have to pay,' Algar said. 'The banks' excuse is always that they have a legacy system and they can't pass on cuts straight away, but they seem to be able to pass on the increases pretty quickly.' Athena Home Loans were prompt to pass on the last two rate cuts. CEO and founder Nathan Walsh said lenders needed more focus on being fair. 'At a time when the cost of living crisis continues to challenge so many Aussies, acting swiftly to bring some relief to home loaners has to be a priority for all lenders,' Walsh said. 'Savings that result from the RBA lowering the cash rate should be for customers' pockets, not bank profits. Ten lowest variable rate products on market Suncorp Bank Back to Basics Home Loan- 5.33% Pacific Mortgage Group Standard Variable Home Loan- 5.39% Border Bank First Home Loan- 5.41% Police Bank First Home Loan- 5.41% Mortgage House Chameleon Executive Home Loan- 5.48% Unity Bank Essential Worker Home Loan- 5.49% G&C Mutual Bank Essential Worker Home Loan- 5.49% BankWAW Back to Basics- 5.54% Bank of China Discount Home Loan- 5.63% Bank Australia Clean Energy Variable Home Loan New Build- 5.77% Five highest variable rate products ME Flexible Home Loan- 8.38% Coastline Bank Introductory Home Loan- 8.51% Arab Bank Australia Essentials Home Loan- 8.94%
Daily Telegraph
02-07-2025
- Business
- Daily Telegraph
Major bank slashes interest rates
One of the major banks has made a power move ahead of the next Reserve Bank meeting to decide the cash rate, introducing new offers to entice more mortgage applicants to fix their loans. ANZ this week announced it would be slashing 10-35 basis points off one to five-year fixed home loan rates, a move that has meant it offers the cheapest fixed rates among the 'big four'. It's come as lending data shows few customers are choosing to fix rates amid wide expectations of another cash rate cut in July, followed by subsequent cuts later this year. This means most of the homeowners on variable rates have the power to chase the best deals in the market by refinancing to different lenders. MORE: Homeowners told to brace for rate cut bombshell ANZ's cheapest fixed rates are now 5.29 per cent and 5.19 per cent for one-year and two-year fixed terms, respectively. The move has occurred after a range of smaller lenders earlier slashed their fixed rates to just under 5 per cent. This included Pacific Mortgage Group, which is offering 4.99 per cent for one-year fixed terms, while Easy Street is offering 4.95 per cent for two-year fixed loans, according to Mozo analysis. Variable rates for new customers currently average about 5.74 per cent. Mozo finance expert Rachel Wastell said ANZ's fixed rate offers were likely a 'strategic first-mover play'. 'ANZ is getting ahead of the curve to lock in borrowers who might be contemplating a fixed rate before the RBA acts,' she said. MORE: One in six unit projects now 'ghost' towers 'Inflation data has also shifted expectations and the market now sees rate cuts as more imminent, so ANZ could be capitalising on that shift before the RBA confirms direction. 'By slicing just enough to undercut the other majors, ANZ gets to look competitive without actually joining the below 5 per cent pack. So it could also be a positioning move, just as much as a pricing one.' Canstar data insights director Sally Tindall said ANZ was moving on the assumption more cash rate cuts were imminent. 'This move by ANZ consolidates its lead as the lowest-cost fixed rate lender out of the majors,' she said. 'The bank is factoring in the possibility of further cash rate cuts, which could be coming down the line as soon as next week.' Ms Tindall added that customers were rarely choosing fixed rates. 'ANZ could also be looking to shore up its loan book by locking in more customers on fixed rate deals,' she said. 'The bank's most recent half year results show that just 3 per cent of its residential mortgage book is on a fixed rate contract. 'This means the remaining 97 per cent on variable rates are free to move at any time without major penalties.' Ms Tindall said homeowners considering fixing their rates should keep some perspective. 'While ANZ's fixed rates are streaks ahead of the other big banks, particularly on shorter terms, they're still a far cry from the lowest fixed rates in town, with a total of 13 different lenders now offering at least one fixed rate under 5 per cent,' she said. 'If you're looking to lock in your rate, don't go aiming for one that starts with a 5 or a 6. You should be looking in the 4's.'
News.com.au
02-07-2025
- Business
- News.com.au
Major bank slashes interest rates
One of the major banks has made a power move ahead of the next Reserve Bank meeting to decide the cash rate, introducing new offers to entice more mortgage applicants to fix their loans. ANZ this week announced it would be slashing 10-35 basis points off one to five-year fixed home loan rates, a move that has meant it offers the cheapest fixed rates among the 'big four'. It's come as lending data shows few customers are choosing to fix rates amid wide expectations of another cash rate cut in July, followed by subsequent cuts later this year. This means most of the homeowners on variable rates have the power to chase the best deals in the market by refinancing to different lenders. ANZ's cheapest fixed rates are now 5.29 per cent and 5.19 per cent for one-year and two-year fixed terms, respectively. The move has occurred after a range of smaller lenders earlier slashed their fixed rates to just under 5 per cent. This included Pacific Mortgage Group, which is offering 4.99 per cent for one-year fixed terms, while Easy Street is offering 4.95 per cent for two-year fixed loans, according to Mozo analysis. Mozo finance expert Rachel Wastell said ANZ's fixed rate offers were likely a 'strategic first-mover play'. 'ANZ is getting ahead of the curve to lock in borrowers who might be contemplating a fixed rate before the RBA acts,' she said. 'Inflation data has also shifted expectations and the market now sees rate cuts as more imminent, so ANZ could be capitalising on that shift before the RBA confirms direction. 'By slicing just enough to undercut the other majors, ANZ gets to look competitive without actually joining the below 5 per cent pack. So it could also be a positioning move, just as much as a pricing one.' Canstar data insights director Sally Tindall said ANZ was moving on the assumption more cash rate cuts were imminent. 'This move by ANZ consolidates its lead as the lowest-cost fixed rate lender out of the majors,' she said. 'The bank is factoring in the possibility of further cash rate cuts, which could be coming down the line as soon as next week.' Ms Tindall added that customers were rarely choosing fixed rates. 'ANZ could also be looking to shore up its loan book by locking in more customers on fixed rate deals,' she said. 'The bank's most recent half year results show that just 3 per cent of its residential mortgage book is on a fixed rate contract. 'This means the remaining 97 per cent on variable rates are free to move at any time without major penalties.' Ms Tindall said homeowners considering fixing their rates should keep some perspective. 'While ANZ's fixed rates are streaks ahead of the other big banks, particularly on shorter terms, they're still a far cry from the lowest fixed rates in town, with a total of 13 different lenders now offering at least one fixed rate under 5 per cent,' she said. 'If you're looking to lock in your rate, don't go aiming for one that starts with a 5 or a 6. You should be looking in the 4's.'
The Australian
20-06-2025
- Business
- The Australian
Smaller banks offering lowest home loan interest rates after RBA rate cuts: canstar
Making one simple change could save tens of thousands of dollars, and that's even before making extra repayments or throwing money into an offset account. The average owner-occupier variable home loan rate is now at 5.8 per cent, comparison group Canstar estimates. So if you're on that rate or above, and especially if you're in the early years of a 30-year mortgage, it might be time to shop around for a better deal. To give you an idea of what you could be paying, the lowest variable offering currently in the market is 5.34 per cent. For first home buyers it's even lower at 5.24 per cent. Who's offering the best rates? Smaller banks and non-bank lenders are offering the most competitive rates. Non-bank lender Pacific Mortgage Group is leading the pack with its 5.34 per cent variable loan but there are plenty of others sitting just slightly higher, per the table below. Again, keep in mind that Horizon's offering is only for first-home buyers. All up, eight lenders are currently offering rates of 5.39 per cent, including People's Choice, RACQ Bank and Australian Mutual, while a handful more have rates as low as 5.44 per cent. All up, 34 lenders now offer at least one variable rate under 5.5 per cent, according to Sally Tindall, head of research at Canstar. 'If your rate's above 5.8 per cent, alarm bells should be ringing. That's just the average, it's not even competitive,' she says. If you're keen to stick with the big four banks, CBA, Westpac and ANZ are currently offering variable rates of 5.59 per cent, while NAB is the outlier at 5.94 per cent. These are the advertised rates but there's often wriggle room for the bank to do a better deal if, for example, your loan-to-value ratio is particularly low. For those looking at fixed rates, there's a handful offering just under 5 per cent. But the cash rate is widely expected to fall further in the near term, meaning variable rates will continue to drop. Refinancing options Do-it-yourself refinancing, that's dealing with the bank yourself rather than through a broker, can be a bit of a pain and time consuming but it can also pay off. Your broker isn't always going to tell you the absolute lowest rates on the market, only the ones they can get for you. But if you've got a broker who can get you a competitive rate, it means they do all the legwork and you don't have to spend hours calling up each lender to get the best deal. Keep in mind, broker or not, switching lenders comes with fresh credit checks and invasive financial questions, as well as refinance fees that can range from $500 to $2000. There's also the risk that you refinance and the Reserve Bank cuts rates but your new lender doesn't pass the cuts on. We may not see this in the current cycle, especially since Treasurer Jim Chalmers was straight onto the banks in February ordering them to pass the RBA cut on, but it's a risk to be aware of. If you can't get a lender to give you a rate near the lowest in the market (5.34 per cent), getting it down from say, 6 to 5.5 per cent, will still mean a big saving. But there are traps to watch for, including the impact of stretching out your loan term back to 30 years. Crunching the numbers for The Australian, Canstar has come up with a couple of scenarios that illustrate the point. A borrower with a $600,000 home loan and 25 years left on their mortgage who refinances to 5.5 per cent and keeps their current loan term will potentially save almost $52,000 in interest. But if that same borrower extended the loan term back out from 25 to 30 years, their monthly repayments would drop by $459 but over the life of the loan they'd actually end up paying $55,000 more than if they'd done nothing at all. Canstar's scenario assumes there's two more RBA rate cuts (which we expect this year), bringing the cash rate to a neutral 3.35 per cent. It also assumes the banks pass on these cuts. No frills, digital only Other offerings in the market to look at are the no-frills, digital-only products like CBA's digi home loan and digital bank Up, which is backed by Bendigo Bank. CBA's digi home loan rate for owner-occupiers is at 5.59 per cent while its offering for investors is a competitive 5.69 per cent. Unloan, another digital-only offering backed by CBA is even lower, at 5.49 per cent. Like other lenders, CBA has seen a pick-up in customers looking to refinance since the RBA kicked off its rate-cutting cycle in February, according to its executive general manager for home buying, Dr Michael Baumann. 'It's a good trigger for customers to look at the interest rate they're paying and figure out whether they're on a good deal,' Baunmann says. The bank has seen a doubling of applications on the digital home loan product in the past year. And in a sign of an increasingly competitive market, CBA recently slashed its rates more than the RBA's 0.25 per cent May rate cut. Over the past six weeks the rate for owner occupiers has come down 31 basis points, while for investors it's down 43 basis points. With market watchers tipping two more RBA rate cuts in the next few months, if you get your lender down to a rate of 5.49 or less before the next cut you could be looking at a rate that starts with a 4 within a few months. Business The latest surge in Bitcoin, along with big players making investments in the sector, is retesting interest in the mysterious asset class. But is it for you? Business From July 1 the way the ATO enforces unpaid debts is changing. For some, it means their interest bill is poised to double.
