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Australian borrowers have fewer low-rate home loan options to choose from, with Canstar data showing the number of lenders offering rates below 5.75% has fallen from 10 to four in a week.
As of May 31, the only lenders on Canstar’s database with at least one home loan rate below 5.75% were Horizon Bank, LCU, MOVE Bank, and Pacific Mortgage Group.
LCU had the lowest variable rate listed by Canstar, with its Simple Home Loan at 5.69% and a comparison rate of 5.71%. Horizon Bank and Pacific Mortgage Group followed with owner-occupier principal-and-interest variable rates of 5.74%. The drop in lower-rate options came as more lenders moved rates higher ahead of the Reserve Bank of Australia’s next cash rate decision.
From May 25 to May 31, four lenders increased 23 owner-occupier and investor variable rates by an average of 0.22%. Only one lender cut variable rates, reducing two rates by an average of 0.10%.
Fixed rates also rose during the week. Five lenders increased 65 owner-occupier and investor fixed rates by an average of 0.13%.
|
Provider |
Loan |
Max LVR |
Interest rate |
Comparison rate |
|
LCU |
Simple Home Loan |
95% |
5.69% |
5.71% |
|
Horizon Bank |
First Home Buyer Loan P&I <70% |
70% |
5.74% |
5.74% |
|
Pacific Mortgage Group |
Variable P&I <60% |
60% |
5.74% |
5.74% |
|
G&C Mutual Bank |
Essential Worker Variable |
95% |
5.80% |
5.85% |
|
Unity Bank |
Essential Worker Variable |
95% |
5.80% |
5.85% |
|
Virgin Money |
Residential Lite Home Loan Variable P&I <80% >150k |
80% |
5.84% |
5.86% |
|
Police Bank |
First Home Loan P&I 80-98% |
98% |
5.84% |
5.91% |
For owner-occupiers paying principal and interest, the average variable rate is now 6.65%, based on a $600,000 loan at 80% loan-to-value ratio. Average fixed rates for the same borrower profile range from 6.49% for a one-year term to 6.74% for a five-year term.
The lenders that raised variable rates were Hume Bank, Police Credit Union, Qantas, and Unloan. Beyond Bank was the only lender listed by Canstar as cutting variable rates. For fixed rates, increases came from Auswide Bank, IMB, MyState Bank, NAB, and Summerland Bank.
|
Rate statistic |
Basic variable |
Standard variable |
Package standard variable |
Overall variable |
1-year fixed |
2-year fixed |
3-year fixed |
4-year fixed |
5-year fixed |
|
Average |
6.37% |
6.87% |
6.51% |
6.65% |
6.49% |
6.51% |
6.58% |
6.69% |
6.74% |
|
Minimum |
5.94% |
5.69% |
5.89% |
5.69% |
5.99% |
5.99% |
6.04% |
6.39% |
6.30% |
|
Minimum any LVR |
5.84% |
5.69% |
5.84% |
5.69% |
5.99% |
5.99% |
6.04% |
6.39% |
6.30% |
|
Maximum |
9.29% |
9.39% |
8.76% |
9.39% |
7.44% |
7.54% |
7.64% |
7.34% |
7.54% |
|
Decreases |
1 |
0 |
1 |
2 |
0 |
0 |
0 |
0 |
0 |
|
Increases |
0 |
3 |
4 |
7 |
6 |
6 |
5 |
2 |
2 |
|
Average decrease |
-0.10% |
- |
-0.10% |
-0.10% |
- |
- |
- |
- |
- |
|
Average increase |
- |
0.23% |
0.25% |
0.24% |
0.13% |
0.12% |
0.15% |
0.15% |
0.05% |
|
Old average |
6.37% |
6.86% |
6.49% |
6.64% |
6.48% |
6.50% |
6.58% |
6.68% |
6.74% |
“Two weeks out from the next cash rate decision and the fixed rate market has largely settled down with just five lenders hiking at least one fixed rate last week. NAB might be in this list, however, Australia’s third largest lender made relatively minor tweaks, instead of a mass recalibration, in a move that mirrors the current sentiment for the future of the cash rate. There could be further hikes, but the RBA is unlikely to be making this decision in the immediate future,” Canstar.com.au data insights director Sally Tindall said.
“When it comes to the lowest fixed rate in the market, it’s now a game of last person, or rather, lender, standing with just two credit unions still offering a fixed rate under 6%--Transport Mutual and Northern Inland. In a market where the vast majority of fixed rates now sit firmly in the 6’s and 7’s, both might not last the week.”
Tindall also pointed to the rising cost of switching loans, citing RBA data showing home loan bank fees rose 17% last financial year from the previous year.
“Just remember, in most cases, fees aren’t like death and taxes. Often they can be negotiated.”
