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- No move expected from the RBA, but banks keep chipping away at variable rates
No move expected from the RBA, but banks keep chipping away at variable rates
Variable rates continue to fall, with 27 lenders cutting at least one variable rate in the last month.
This is despite the RBA keeping the cash rate on hold for almost 12 months and no move expected until at least 2024.
Rate changes in the last month: lenders that have moved at least one rate
| Lenders that have cut | Lenders that have hiked | |
| Variable | 27 | 1 |
| 1 year Fixed | 7 | 1 |
| 2 year Fixed | 6 | 0 |
| 3 year Fixed | 3 | 10 |
| 4 year Fixed | 0 | 9 |
| 5 year Fixed | 2 | 9 |
Source: RateCity.com.au. Data is from 4 September to 3 October 2021 inclusive.
Analysis from RateCity.com.au shows while the majority of rates under 2 per cent are fixed, there are now 48 variable home loan rates also under 2 per cent.
Number of home loan rates under 2%
| Category | Number of rates under 2% | Current lowest rate |
| Variable | 48 | 1.77% |
| 1-year fixed | 47 | 1.59% |
| 2-year fixed | 79 | 1.59% |
| 3-year fixed | 31 | 1.79% |
| 4-year fixed | 0 | 2.15% |
| 5-year fixed | 0 | 2.27% |
Source: RateCity.com.au.
RateCity.com.au research director, Sally Tindall, said the majority of cuts in the last month were to variable rates.
“Banks largely left fixed rates alone last month, opting for a ‘wait and see’ approach as they work out what impact Australia’s COVID recovery plan will have on the economy,” she said.
“However, this hasn’t stopped many lenders from taking the scissors to their more malleable variable rates, which were lagging well behind fixed rates.
“When the RBA cut the cash rate last November there were just six variable rates under 2 per cent. Today there are 48, including five investor rates.
“After the last two cash rate cuts, variable rates barely moved as most lenders opted to drop fixed rates instead. If anything, these cuts are overdue,” she said.
While the value of new home loans dropped slightly in August, refinancing hit a record high of $17.78 billion.
“Locked-down Australians might not have been able to hit the stores over the last couple of months, but they have used the time to take their home loan shopping,” she said.
“This refinancing renaissance is great news. Each month tens of thousands of households are now saving more on their mortgage, but also collectively it puts pressure on lenders to keep their rates competitive.
“In recent months almost $50 billion worth of residential mortgages has been up for grabs. This might seem like a gigantic pot, but with over 120 lenders on the market, and hordes of borrowers with itchy feet, the competition is intense,” she said.
Lowest rates on the RateCity.com.au database
| Lender | Rate | |
| 1 yr fixed | Greater Bank, Bank of Us | 1.59% |
| 2 yr fixed | Greater Bank | 1.59% |
| 3 yr fixed | Community First Credit Union | 1.79% |
| 4 yr fixed | Illawarra Credit Union | 2.15% |
| 5 yr fixed | Freedom Lend | 2.27% |
| Variable | Reduce Home Loans | 1.77% |
Source: RateCity.com.au Note: Rates are for owner-occupiers paying principal and interest. Some LVR requirements apply. Greater Bank is only available for properties in NSW, Qld and ACT. Bank of Us is only available to Tasmanian residents.
Lowest big four bank owner-occupier home loan rates
| CBA | Westpac* | NAB | ANZ | |
| 1 yr fixed | 2.09% | 1.99% | 2.09% | 2.04% |
| 2 yr fixed | 1.99% | 1.89% | 1.99% | 1.94% |
| 3 yr fixed | 2.19% | 1.98% | 2.18% | 2.04% |
| 4 yr fixed | 2.29% | 2.49% | 2.49% | 2.49% |
| 5 yr fixed | 2.99% | 2.79% | 2.79% | 2.69% |
| Variable | 2.69% | 1.99% for 2 yrs then 2.49% | 2.69% | 2.72% |
Source: RateCity.com.au. *Note: Westpac's rates are for a loan to value ratio of up to 70%.
Disclaimer
This article is over two years old, last updated on October 4, 2021. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.
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