Lenders are cutting fixed rates and offering 4.99% deals to first-home buyers, while refinancers face stricter conditions ahead of the next RBA decision, according to Canstar.
Two lenders trimmed 19 owner-occupier and investor fixed rates this week, averaging a 0.16% reduction. The average variable rate for owner-occupiers paying principal and interest sits at 5.94%.
Canstar’s database now shows 472 home loan rates below 5.25%, up from 470 last week – signalling competition is still heating up.
Unity Bank, G&C Mutual Bank, and Horizon Bank are now offering 4.99% variable rates, but only to first-home buyers.
“First-home buyers are clearly back in vogue as spring continues to fire up the property market and the government prepares to uncap its Home Guarantee Scheme,” said Canstar insights director Sally Tindall (pictured).
“The recently merged Unity and G&C Mutual banks have joined Horizon as the lowest variable rate lenders in town at 4.99%, with all three reserving this market-leading rate exclusively for first-home buyers.”
For refinancers, in1bank holds the lowest variable rate at 5.08%, but eligibility is restricted to borrowers with an LVR of 50% or less.
“The lowest rate on the Canstar database for refinancers is 5.08% from the relatively new, in1bank,” Tindall said. “A sharp rate, absolutely, but the bank requires a maximum loan-to-value ratio of 50%, which is a steep ask, even for many established refinancers.”
She noted that APRA’s July figures showed in1bank with just $2.5 million in household mortgages, highlighting its early-stage presence.
“While this rate could cause some borrowers to stop, pause and potentially consider fixing for the first time in years, with plenty of lenders offering fixed rates under this mark, including big bank rival Westpac, and the majority of borrowers still sticking with variable rates in the hope there’ll be further cash rate cuts, it’s unlikely to attract a flood of borrowers,” Tindall said.
NAB lifted its savings rates last Friday, increasing two key products by 5 basis points. Its highest ongoing rate now stands at 4.15%.
“While the boost … still isn’t close to the market leaders, it’s a great reminder that banks are willing to entertain the idea of hikes in a rate-cutting cycle in order to attract new business,” Tindall said.
Market watchers expect the RBA to hold steady at its upcoming meeting.
“With a week to go before the next RBA decision, there’s very little anticipation of a rate cut this time around,” Tindall said.
“Yes, last week’s labour force figures recorded a drop in the number of people employed, however, with the economy picking up pace, the July CPI indicator recording a sharper than expected rise and the unemployment rate still sitting at 4.2%, there’s currently no urgency for another cash rate cut.”
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