Banks slash fixed rates, pricing in Melbourne Cup cut

Three of the Big Four Banks have dropped rates on their fixed home loans in the past week, with NAB the latest major bank to cut its rates by up to 0.40 per cent today.

In total, 17 lenders – including CBA and ANZ – have cut rates on fixed home loans since October 1.

In the month before the October rate cut, 27 lenders cut fixed rates, most notably Westpac, which slashed rates by up to 1.30 per cent.

Paul Marshall, chief executive at RateCity.com.au, said this flurry of rate cuts is a sign banks are foreseeing a further cash rate cut, which could come as soon as next month.

“Fixed rates have been tumbling since the last rate cut, which indicates lenders could be pricing in yet another RBA cut,” he said.

“We saw a similar trend last month when more than two dozen banks reduced their fixed rates in September.

“As a result, we are seeing record low fixed rates and it’s now possible to lock in a rate under 3 per cent for five years. This suggests many banks are forecasting a sustained period of low rates.

“Although rates are low, fixing has fallen out of favour, with just 10.4 per cent of new loans being fixed.

“Many punters appear to be betting on a further rate cut as soon as Melbourne Cup day where we could see the cash rate drop to 0.50 per cent.”

Lowest Big Four Bank fixed rates

Source: RateCity.com.au Note: Rates are for owner occupiers paying principal and interest.

*NAB 2-year rate is for first home buyers. Regular 2-year rate is 2.98%

Lowest fixed rates on RateCity.com.au

Source: RateCity.com.au. Note: Rates are for owner-occupiers paying principal and interest.

Variable home loan cuts

In total, 36 lenders have so far announced variable home loan rate cuts.

The average cut for owner-occupier customers paying principal and interest is currently 0.16 per cent.

For the full list of variable rate cuts see RateCity’slive rate cut list

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