More mortgage lenders have dropped the axe on their home loans just as the RBA Board decided to leave the cash rate steady and the CPI monthly indicator revealed encouraging signs, despite underlying risks.
While lower bond yields and swap rates have largely driven the recent tumbles noted in the fixed rate home loan space, it appears that encouraging signs - despite underlying risks - brought by the latest CPI monthly indicator prompted some variable rates to take the plunge.
On Tuesday, the central bank's rate-setting committee handed down a widely anticipated decision to hold the cash rate at 4.35%.
The RBA Board reiterated its hawkish stance that enough evidence that the underlying inflation - not headline figures - returning to target is required before it considers bringing the cash rate down from its 12-year peak.
A day after the Board's meeting, the August CPI indicator revealed that annualised headline inflation rate eased to 2.7%, the lowest reading since August 2021.
However, just like the RBA's decision a day before, the headline figures falling below 3% was expected, following the roll out of federal and state government energy subsidies.
Underlying inflation - as represented by the trimmed mean - rose 3.4%, still well above the RBA's 2-3% target range.
Nevertheless, green shoots are emerging for mortgage holders and aspiring homeowners holding out hopes for lower rates, especially in the variable space.
CommBank a few weeks ago dropped a bombshell, cutting its variable home loan rates when its Big Four peers have only been adjusting their fixed mortgages.
This week, the variable rate cuts have been brought to us by Teachers Mutual Bank.
Teachers Mutual Bank cuts variable and fixed home loan rates
Brands operating under the member-owned Teachers Mutual Bank Limited moved in chorus to slash their variable home loan rates.
Teachers Mutual Bank, UniBank, Firefighters Mutual Bank, Health Professionals Bank, and Hiver shed 15 basis points from Your Way Plus variable mortgages.
Your Way Plus features the banks' packaged offering that comes with 100% offset and fee-free redraw facility, among others.
The adjustments also apply to the home loan's discount rate applicable for essential workers.
Here are the new rates for Your Way Plus for owner occupiers paying principal and interest (P&I), available beginning 27 September:
| Product | New rate | Comparison rate |
|---|---|---|
| LVR up to 60% | 6.09% p.a. (-15 bps) | 6.39% p.a. |
| LVR up to 80% | 6.19% p.a. (-5 bps) | 6.49% p.a. |
| LVR up to 90% | 6.64% p.a. (-5 bps) | 6.94% p.a. |
| LVR >90% | 6.89% p.a. (-5 bps) | 7.18% p.a. |
Teachers Mutual Bank Limited also took a knife to a whole raft of its fixed rate mortgage products for residents and investors.
Your Way fixed and Your Way Plus fixed for 1, 4, and 5 years have decreased by 25 basis points, while those on 2- and 3-year terms were cut 15 basis points.
Adelaide Bank drops OO fixed mortgages below 6% p.a.
Adelaide Bank has put two of its fixed rate home loan products on both 1- and 2-year terms on the chopping block this week, bringing them below the 6% p.a. threshold.
The bank shed 35 basis points from SmartSaver Fixed and SmartFix products on 1-year terms.
While a much larger 65 basis points were cut from the same products that are fixed for two years.
| Product | New rate | Comparison rate |
|---|---|---|
| SmartSaver Fixed P&I 1 yr | 5.94% p.a. (-35 bps) | 6.21% p.a. |
| SmartSaver Fixed P&I 2 yrs | 5.64% p.a. (-65 bps) | 6.13% p.a. |
| SmartFix P&I 1 yr | 5.94% p.a. (-35 bps) | 6.38% p.a. |
| SmartFix P&I 2 yrs | 5.64% p.a. (-65 bps) | 6.29% p.a. |
SmartSaver is Adelaide Bank's basic home loan product, available in both fixed and variable rates.
SmartFix, meanwhile, is a fully featured mortgage that comes with 100% offset account and free online redraws.
Adelaide Bank has moved to broker-only channels, and aren't available at the retail level.
Newcastle Permanent lowers residential and investor home loans
Newcastle Permanent has joined the other customer-owned banks that slashed fixed home loans rates this week.
Up to 30 basis point cut was applied across the lender's owner occupier and investor mortgages fixed from one to five years.
The latest adjustments have brought most of the bank's fixed home loan rates below the 6% p.a. mark. Just see for yourself below:
| Product | New rate | Comparison rate |
|---|---|---|
| Residential Fixed P&I 1 yr | 5.99% p.a. | 8.26% p.a. |
| Residential Fixed P&I 2 yrs | 5.69% p.a. | 7.95% p.a. |
| Residential Fixed P&I 3 yrs | 5.69% p.a. | 7.70% p.a. |
| Residential Fixed P&I 4 yrs | 5.79% p.a. | 7.52% p.a. |
| Residential Fixed P&I 5 yrs | 5.79% p.a. | 7.32% p.a. |
The 10-basis-points-less special offer rate, which is currently available to loans with less than 80% LVR, were also reduced this week.
More fixed rate movements this week:
- Australian Military Bank slashed OO and INV fixed home loans up to 35 basis points.
- Regional Australia Bank cut OO and INV fixed home loans up to 25 basis points.
Photo by Chris Lawton on Unsplash
Need help with a home loan?