While the trend seems to be that banks are increasing rates out of time with the RBA, some banks are in fact reducing their rates.
The latest bank to cut rates is Bendigo Bank, which is slicing its interest rates by as much as 0.20%, effective from yesterday (19 February), for new customers those paying principal and interest as well as interest only. The non-major’s fixed rates remain stable. Existing customers will not be affected.
Bendigo Bank is now the eighth lender to make variable cuts since the start of the year.
Owner-occupied borrowers repaying principal and interest, Basic Variable Owner Occupied Home Loan will decrease from 4.48% to 4.28%.
For a $400,000 loan over a 30-year loan term, this decrease cuts $47 from the monthly loan repayments and saves $16,992 in interest over the life of the loan.
Canstar’s group executive of financial services, Steve Mickenbecker, says, “Bendigo Bank has bucked the trend of increasing home loan rates, instead reducing its variable rate by a generous 0.20%.
“Bendigo has joined the 7 lenders that have cut variable rates since the beginning of the year, while 14 lenders have increased the variable rate on loans for existing customers.
“Bendigo is less reliant on wholesale sources of funding for its loan book, and not quite as pressured by the moves in that market.
“The Bendigo Package loans were positioned at around the same price as the major banks. This change gives them something in the market to kick start the growth engine.”
Response to the Royal Commission
Recently, Bendigo and Adelaide Bank’s CEO Marnie Barker responded to the Royal Commission recommendations saying, “In relation to the broker recommendations contained in the Royal Commission Final Report, we do not want to see a model that is not in the best interests of consumers and that puts the important mortgage broking industry at risk and as a result, reduces competition. This is consistent with how we have always advocated for customer choice and putting customer interests first.
“We will work with legislative and regulatory bodies to refine and implement the government-endorsed recommendations, but we will also work quickly and seek industry input where required to ensure we identify any unintended consequences.
“We have a long history of supporting brokers through both good and testing times. The recommendations of the Royal Commission have shaken many in our network and will undoubtably lead to legislative change.
“We note the important role brokers play and will continue to play in the market and our mortgage broker partners will continue to remain an important and integral component of our business strategy. We are confident we’ll continue to work effectively through the current business environment in consultation with our partners and stakeholders as the industry evolves.
“As part of our commitment to customer choice and competition, we will continue to offer a range of ways for customers to bank with us through both proprietary and partner business models.”