Bank of Queensland (BOQ) has cut its lowest two-year fixed rate to 4.89% for owner-occupiers with a 20% deposit, marking the sharpest standard home loan rate in the market and signalling that lenders are factoring in more Reserve Bank (RBA) cash rate cuts.
The move follows aggressive competition among banks to attract borrowers with headline-grabbing rates, although it excludes green loans. Bank Australia still leads in that category, offering 4.59% for three years on qualifying energy-efficient new builds.
According to Canstar, 18 lenders now have at least one fixed rate under 5%, while only one – Police Credit Union – offers a variable rate below that level.
“Bank of Queensland’s cut today might be small but it's a power move that puts it on the top of the lowest rate tables,” said Sally Tindall (pictured), Canstar.com.au’s data insights director.
“The question is, which bank will be next to trump them, in a bidding war that’s slowly but surely pushing fixed rates south. Fixed rates starting with a ‘4’ are now a firm fixture in the lowest rate tables with 18 lenders now in the under 5% club.”
If the RBA cuts the cash rate on Tuesday, Canstar estimates:
“However, with the majority of borrowers still on variable rates, most will be wired to the news next Tuesday afternoon, hoping for that next cash rate cut,” Tindall said. “If the RBA cuts the cash rate next week, owner-occupiers paying down their debt should not be on a rate that’s over 5.5%.
If the cash rate falls to 3.6% on Tuesday and the full cut is passed on, an owner-occupier with a $600,000 loan over 25 years could save about $90 a month on repayments.
“ANZ’s rate hike yesterday might have thrown some cold water over the competition between the big banks, however, with CBA and Westpac neck-and-neck for the title of the lowest big bank variable rate, let's hope there’s still some fight left in this battle,” Tindall said.
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