No lenders raised any variable or fixed rates this week, according to Canstar. Instead, 41 lenders cut 397 owner occupier and investor variable rates by an average of 0.25%.
The average variable interest rate for owner occupiers paying principal and interest is now 5.97%, while the lowest variable rate for any LVR is 4.89%, offered by Easy Street Financial Services.
There are now 1,486 rates below 5.5% on Canstar’s database, up from 1,167 the week before.
“The variable rate cuts rolled in thick and fast, as expected, with 41 lenders dropping new customer variable rates in the past week, still coming in on the back of the RBA’s August cash rate cut,” said Sally Tindall (pictured), Canstar insights director.
“While the majority of these cuts were pre-announced, there were some genuine surprises in there. In particular, low-cost lender Easy Street’s decision to post a lowest variable rate of 4.89%, with a comparison rate of 4.94%. This is well below our estimates of the post-August RBA rates and shows just how fierce the competition has become for the title of the lowest rate lender.”
She added that there are a few caveats around the deal, the biggest being its limited availability, with applications closing on Oct. 10.
Tindall said fixed rates also plummeted after the cash rate cut, with 19 lenders reducing at least one fixed rate in the past week, including Westpac, which made cuts of up to 0.7 percentage points — “not exactly a trim but rather more like an overhaul.”
As a result, Westpac now offers the lowest fixed rate among the majors — and is the first to bring a rate starting with a “4” this cycle. Nearly 30 lenders now offer at least one fixed rate under 5%.
Westpac data shows just 3% of mortgages on its books were fixed at the end of June, but this could shift if fixed rates continue to fall.
Tindall also highlighted growing competition through new customer incentives.
“The mortgage wars took yet another turn this week, with CBA launching a new feature on its digital-only mortgage: Qantas Frequent Flyer points – and plenty of them – with between 100,000 and 300,000 on offer, depending on the loan size,” she said. “The bank might have buried cashbacks more than two years ago, but this latest sweetener has the same target – new customers – provided they come directly to the bank.
Tindall added a note of caution.
“Of course, anyone considering such a deal should do the maths to make sure they’re not better off on a lower rate loan instead and check the rest of the mortgage suits their finances, because while a one-off perk might sound like a holiday come true, it’s always worth weighing it up against the rest of the pack,” the Canstar leader said.
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