As with basically any given week, there is conflicting data about the way the wind blows in regards to the interest rate outlook:
- The US Fed cut its interest rate by 50 basis points, leading to speculation the RBA might need to do so here, before long.
- The jobless rate is still proving strong, and the RBA is still concerned about low productivity
- CBA has pushed back its first cut call from November to December
However, rather than trying to read too much into the tea leaves, the good news on the mortgage front is that many banks have 'priced in' rate cuts to fixed-rate home loans.
While your rate is locked in, the prevailing fixed rates of the day are often around one whole percentage point lower than their variable counterparts.
In this vein, as ubank's Kanishka Raja pointed out to me on the Savings Tip Jar podcast this week, why not give yourself a rate cut before the RBA does?
Many forecasts are for the RBA to make about one percentage point's worth of rate cuts over the next year, so this line of thinking tracks.
South West Slopes... cool name, cool new sub-5% rate
| Product | New % Rate Per Annum (Comparison rate*) | Details |
|---|---|---|
| Premium 3 Year Fixed Rate Special Offer | 4.99% (6.15% for OO, 6.19% for Inv) | $800k-$2.5m, principal & interest, |
Now, as my savvy colleague spotted, the bank has introduced this special offer.
Yes, that's right, a sub-5% home loan; the last time we saw average rates this low was about two years ago, per the RBA's home loan statistics.
The kicker is it's available for both owner occupiers and investors. They need to borrow between $800,000 and $2.5 million.
Up to $20,000 per year is allowable in extra repayments, which works out to be nearly $385 a week - noteworthy given it's a fixed rate.
Despite quasi-renaming itself to SWS Bank, I much prefer its old moniker South West Slopes Credit Union.
The mutual bank is on the smaller end of the scale in terms of home loan volumes; less than $160 million in mortgages are held by the bank based in the same town as the mighty Young (NSW) Cherrypickers Group 9 rugby league team.
Its town hall is pictured above.
Given the bank's customer deposit book, at $245 million, is much greater than its loan book, the attractive rate could be a ploy to balance the ledger.
Though one wonders if with its small size, it would possess the short-term capital required to cover any sudden influx in home loan customers.
The strong stance could also be because the bank saw the craziness happening in wholesale funding markets, and thought getting funding on the books from home loan borrowers was a better bet.
As safe as houses, as they say.
Bendigo Bank makes befuddling series of changes
| Product | New % Rate Per Annum (Comparison Rate*) | Change |
|---|---|---|
| Express OO P&I Variable | 6.09% (6.22%) | +0.08 |
| Express OO P&I 1 Year Fixed | 5.84% (6.19%) | -0.45 |
| Express OO P&I 2 Year Fixed | 5.54% (6.11%) | -0.45 |
| Complete OO P&I 1 Year Fixed | 5.84% (6.42%) | -0.45 |
| Complete OO P&I 1 Year Fixed | 5.54% ( 6.32%) | -0.45 |
Bendigo Bank was like a lot of other banks in recent weeks, cutting fixed interest rates.
Interestingly, however, it also increased its variable rate. This is at odds given some other market movers in recent weeks.
Maybe the 'other big bank' is trying to hedge its bets either way.
The Express product is available online online, whereas the Complete line is available in-branch or via mobile lender.
AMP packages up some packaged home loan rate cuts
| Product | New % Rate Per Annum (Comparison Rate*) | Change |
|---|---|---|
| Professional Package OO P&I 80% 1 Year Fixed | 5.94% (7.19%) | -0.25 |
| Professional Package OO P&I 80% 2 Year Fixed | 5.79% (7.04%) | -0.30 |
| Professional Package OO P&I 80% 3 Year Fixed | 5.79% (6.91%) | -0.20 |
| Professional Package OO P&I 80% 5 Year Fixed | 5.79% (6.69%) | -0.45 |
AMP also reduced rates on its equivalent investor products.
The Professional Package basically means it comes with an offset account.
Bank of Queensland adds to the feeding frenzy
| Product | New % Rate Per Annum (Comparison Rate*) | Change |
|---|---|---|
| Residential Fixed 2 Year Discount P&I 80% | 5.59% (6.36%) | -0.20 |
| Residential Fixed 3 Year Discount P&I 80% | 5.59% (6.29%) | -0.10 |
| Residential Fixed 4 Year Discount P&I 80% | 5.89% (6.33%) | -0.10 |
| Residential Fixed 5 Year Discount P&I 80% | 5.89% (6.29%) | -0.10 |
| Investment Fixed 2 Year P&I 90% | 6.14% (6.62%) | -0.10 |
Bank of Queensland's discounted rates received a further haircut this week, with a maximum LVR of 80%.
A series of interest-only investment fixed loans were also cut.
Other changes
- Horizon Bank slashes fixed rates by between 5 and 10 basis points.
- Community First slashes fixed rates by 20 basis points.
- Summerland Bank cuts fixed rates by up to 15 basis points
- ME Bank cuts fixed rates by up to 20 basis points
- MyState Bank cuts fixed and variable rates by up to 55 basis points
- Tiimely Home cuts one- and two-year fixed rates by up to 40 basis points
Photo by Sheba Also on Wikimedia Commons
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