AMP cuts variable home rate

AMP will cut its introductory variable mortgage rate by 45 basis points and its basic variable mortgage rate by 22 basis points thanks to the Federal Government’s support of the RMBS market.

CEO Craig Dunn wrote to treasurer Wayne Swan to tell him that AMP “have been able to achieve these reductions in a large part due to the Government's recent initiative through the Australian Office of Financial Management (AOFM) in the Australian securitisation market. This, coupled with the AOFM's stated ongoing program of support, gives AMP the capacity to implement these reductions.”

Swan said that the decision by AMP provides more evidence that the investment in RMBS is enabling smaller lenders to lend at competitive mortgage rates.

“This is helping to put more competitive pressure on the big banks and downward pressure on mortgage rates over time – a really important objective,” Swan said. “The global financial crisis hit some parts of the banking sector harder than others, and that has created some big challenges in the home-lending market.”

Swan said that, while these challenges cannot be solved overnight, he will continue to support banking competition.