Home loan competition heating up between banks again
(17 April 2015 – Australia) Home loan rates have hit record lows as competition heats up and banks start dropping fixed rates to below 4 percent.
On 13 April ME Bank started the move by cutting its three-year fixed Standard Home Loan by 40 basis points to 3.99 percent and its one-year fixed rates to 4.29 percent as well as moving its five-year rate to 4.39 percent.
Patrick Nolan, head of home loans at ME Bank, said record low rates were possible because money markets – where banks buy their fixed funding – were already pricing in two more RBA rate cuts.
“Even though the RBA didn’t cut in April, customers can still get their rate cuts today – through a fixed loan.
“With competition hotting up, many Banks will pass these fixed rate savings directly on to customers.”
“Banks are fighting over a smaller slice of the lending pie which is helping to push fixed rates to never before seen lows.
Nolan said more banks were also introducing greater flexibility into their fixed loans to increase appeal.
“We now let new customers pay an extra A$30,000 over their fixed term – which is an average of over A$830 a month in extra repayments on a three-year fixed term.
“Banks are working harder than ever before to win new customers.”
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