Customer-owned banks lead home loan rate shifts

Widespread speculation about potential rate hikes was somewhat doused with the release of the ABS' labour force survey, which revealed that the unemployment rate ticked up to 4.1% in June.

The unemployment rate traditionally moves in the opposite direction to the inflation rate; when more people are looking for work, consumer prices tend to rise slower.

The June outcome is broadly in line with the RBA's assessment that the jobless rate will gradually increase until it lands at 4.3% by the end of 2025.

It would have been a good sign for mortgage holders holding out hopes for interest rates to finally go down if only the employment growth was not as strong as it was in the same period.

"Not all increases in the unemployment rate are the same. The unemployment rate can lift when employment growth is weak and the participation rate is unchanged," CommBank head of Australian economics Gareth Aird explained.

"Alternatively, the unemployment rate can rise on solid jobs growth if the participation rate rises sufficiently. The latter happened in June."

Employment increased by a solid 50,000 last month (vs 20,000 market estimate), while the 0.1 ppt uplift in participation rate saw the seasonally adjusted jobless rate inch higher.

"That said, the labour market remains tight, and isn't providing much of a counterbalance to the unhelpful inflation outcomes through the first half of the year," NAB senior economist Taylor Nugent said.

Economic experts believe the jobs figures are unlikely to "shift the dial much in either direction in terms of the risks around an August hike."

This means all eyes are on the next key piece of domestic data, the Q2 CPI.

CommBank expects a quarterly trimmed mean inflation - RBA's preferred gauge - of 0.9% would see the Board vote for another rate hold.

However, an outcome of 1.1% or above "would mean an August hike is more likely than not".

NAB, which had previously delayed its forecast for the start of rate cuts to May 2025, is pencilling in a Q2 trimmed mean of 1%.

Such an outcome historically prompts the RBA to hike the cash rate, but NAB believes other economic indicators are enough for the central bank to hold.

Heritage Bank drops variable mortgage rates

Customer-owned Heritage Bank slashed rates across its select variable home loan products for investors and owner occupiers.

A uniform 15 basis point cut was applied across the Queensland-based bank's Advantage Variable and Discount Variable with up to 90% loan-to-value ratio (LVR).

Available for new customers of owner-occupied mortgages, Discount Variable, with loan size starting at $150,000 up to $700,000, now offers a variable rate of 6.49% p.a. (6.51% p.a. comparison rate*).

Meanwhile, for new investment home lending, the bank offers a 6.74% p.a. interest rate (6.76% p.a. comparison rate*) for principal and interest (P&I) payments, and a 7.04% p.a. rate (7.06% p.a. comparison rate) for interest-only (IO).

Customers seeking home loans bundled with a credit card may take a look at Heritage Bank's Home Advantage products, whose newly adjusted rates are detailed below.

On the other hand, Heritage Bank moved its fixed rates in the opposite direction, applying an across-the-board 20 basis point hike to its investment, residential, and bundled home loans on three- and five-year terms.

Heritage Bank is part of the People First Bank, currently the largest customer-owned bank (by total assets) in Australia.

Greater Bank lowers special offer home loans

Hunter-based Greater Bank, part of the second largest mutual bank NGM Group, also dropped its special offer rates on variable home loans this week.

The Great Rate Home Loan Discount Variable with 80% LVR now offers a 6.04% p.a. interest rate (6.05% p.a. comparison rate*) following a 10 basis point reduction.

The same product available for investors carries a 6.29% p.a. interest rate (6.30% p.a. comparison rate*).

Greater Bank's Great Rate Home Loans come with no monthly, establishment, and annual fees, and include a free redraw facility.

Meanwhile, customers looking for a variable home loan with an offset account can get a 6.19% p.a. rate (6.56% p.a. comparison rate*) offered through the Ultimate Home Loan Discount product.

Australian Mutual Bank hikes fixed rates

Fixed-rate home loans are on the rise this week despite their declining popularity.

Recent ABS data showed only 1.75% of new home lending commitments in May were on fixed terms.

But that didn't stop the Sydney-based Australian Mutual Bank from delivering an unpleasant surprise to aspiring property owners after hiking its first home buyer special offer by 11 basis points.

However, at 5.64% p.a. (6.23% p.a. comparison rate*) for a two-year fixed term at 95% LVR, AMB's rate remains competitive in the current market.

Prior to this week's adjustments, the bank also held the lowest mortgage rate on fixed terms at 5.48% p.a. (6.24% p.a. comparison rate*), available at max 95% LVR.

But compared to the first home buyer special, that loan is fixed for three years and doesn't come with a government guarantee (for successful applicants to the Home Guarantee Scheme).

Australian Mutual Bank is among the participating lenders in Housing Australia's Home Guarantee Scheme (HGS), which recently opened another 50,000 places for the 2025 financial year.

Under HGS' First Home Guarantee and Regional First Home Buyer Guarantee schemes, eligible first-time buyers can purchase a home with as little as a 5% deposit without needing lenders mortgage insurance (LMI).

The government will then guarantee up to 15% of the property value.

Non-first home buyer customers looking for fixed-rate P&I home loans from the bank may check out these newly boosted rates.

Other mover this week:

• Northern Inland Credit Union goes against the grain, lowering fixed interest rates by up to 20 basis points

Read more: Home Loans News Home loan rate changes

Bernadette Lunas

Finance Journalist

Bernadette is a journalist with years of experience covering topics in macroeconomics, real estate, and lifestyle beats for notable print media organisations. She joined the InfoChoice Group in 2024, bringing her passion for writing stories that help Australians make better decisions about money.

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