Regional Australia Bank has cut its lowest two-year fixed home loan rate to a market-leading 5.25% p.a. (5.62% p.a. comparison rate*), intensifying competition in the mortgage market.
The reduced rate is available to owner-occupiers with a loan-to-value ratio (LVR) below 60%, making principal and interest (P&I) repayments.
The rate, which is the lowest on the market excluding green home loan products subsidised by the federal government’s Clean Energy Finance Corporation, reflects the bank’s ongoing efforts to offer competitive lending solutions, Savings.com.au reported.
Owner-occupiers with an LVR between 60% and 70% can also take advantage of Regional Australia Bank’s new 5.25% p.a. rate, albeit with a slightly higher comparison rate of 5.66% p.a. The move comes after the bank trimmed 36 basis points off its previous rate, Savings.com.au reported.
See the table below for the full range of new fixed rates for owner-occupiers making P&I repayments:
Investor borrowers haven’t been left out, with Regional Australia Bank reducing fixed rates across its investor lending range. The lowest two-year fixed investor rate is now 5.46% p.a. (5.75% p.a. comparison rate*) for those with LVRs under 60% making P&I repayments.
For those opting for interest-only (IO) repayments, rates are 25 basis points higher, underlining the continuing cost premium for IO borrowing.
Despite the aggressive pricing, fixed home loan rates remain unpopular among borrowers, Savings.com.au reported.
Since mid-2024, fixed rates have been falling in anticipation of Reserve Bank cash rate cuts.
RBA initiated its first cash rate cut in over four years in February. With markets anticipating another cut in May, borrowers appear reluctant to commit to fixed terms.
In a climate of expected rate cuts, it’s no surprise borrowers are reluctant to lock into fixed home loans as variable rates continue to trend downward.
ABS lending data supports this trend, showing fixed-rate loans comprise only about 2% of new home lending by value.
The RBA's new monetary policy board is scheduled to meet on May 19–20 to review the official cash rate.
Economists at Commonwealth Bank are confident a rate cut is imminent, calling it a “done deal” — if inflation falls in line with expectations.
ABS is due to release quarterly inflation data on April 30. Early forecasts suggest inflation will fall within the RBA’s 2–3% target band, reinforcing the likelihood of monetary easing.
CBA analysts anticipate a 25-basis point cut in May, with further reductions in August and November, potentially taking the cash rate to 3.35% by year-end, Savings.com.au reported.
