A bank chief executive has taken a dig at other lenders offering money back for new and returning customers as a ‘sweetener’.
With overall credit growth remaining low the pressure is on many banks to meet their own credit growth expectations and some have been offering cash-back sweeteners to win favour with customers, ME Bank CEO Jamie McPhee said.
“Cash-back sweeteners can be nice in the short-term, but customers should understand they can save much more on their home loan in the long-term by locking in a lower rate.”
Lenders which have recently announced $1000 cash-back deals for new or returning customers include CBA
, St. George, Bank of Melbourne, and BankSA. CUA is offering $500 back.
While ME Bank will not offer this 'sweetener', McPhee announced the lender has cut its one and five year fixed standard home loan interest rates.
He said the cost of fixed rate funding has been falling as global economic weaknesses persist, local economic growth remains below average, the transition to non-mining activity continues, and expectations grow for some fiscal contraction from the budget.
“Fixed rate funding costs are falling as the market pushes out expectations for future RBA
rate movements. ME Bank has taken advantage of these falls and is passing on the savings to customers.”
Its one-year fixed Standard Home Loan rate was cut by 0.05% to 4.89% p.a. (comparison rate 5.35% p.a.) and its five-year fixed Standard Home Loan rate was cut by 0.40% to 5.39% p.a. (comparison rate 5.40% p.a.).
The bank, which is fully owned by industry super funds, said it offers the lowest three-year and five-year fixed home loan rates in the market.
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