Cuts dominate hikes, though uncertainty lingers over RBA's next cash rate move
The Australian home loan market saw significant changes over the past week, with financial comparison site RateCity.com.au reporting that eight lenders cut at least one interest rate while two banks raised theirs.
National Australia Bank (NAB), the country’s third-largest lender, reduced rates on its basic variable home loan, lowering its lowest advertised rate to 6.44%. However, the rate cut is available only to new customers.
Commonwealth Bank (CBA) still holds the lowest advertised variable rate among the big four at 6.15%. NAB and Westpac both offer the rate at 6.44%, but ANZ’s variable rate stands slightly lower than NAB’s and Westpac’s at 6.14%.
For fixed rates, ANZ provides competitive offerings, leading the big four for two- and three-year terms with rates of 5.74% and 5.74%, respectively. Westpac matches this rate for three-year fixed terms, while CBA and NAB advertise slightly higher rates of 5.89% for the same term.
For longer-term fixed options, Westpac emerges as a leader with rates of 5.89% for four- and five-year terms, ahead of its competitors. In comparison, CBA advertises a five-year fixed rate of 6.69%, the highest among the group.
In a busy week for rate changes, four additional lenders — Bank First, BankVic, Reduce Home Loans, and Summerland Bank — also reduced at least one variable rate, further intensifying competition among smaller and regional lenders.
In the fixed rate category, five lenders trimmed rates in the past week. Among them, St. George, Bank of Melbourne, and BankSA cut their fixed rates by 0.05 percentage points, bringing their lowest two-year fixed rate to 5.79%.
BankVic made the most notable adjustment, slashing its fixed rates by up to 0.46 percentage points. This move reduced its lowest two-year fixed rate to 5.49%, tying with Easy Street for the lowest two-year fixed rate in RateCity’s database.
Among variable rates, the lowest advertised offerings came from Abal Bank, starting at 5.75%, followed closely by Police Bank and others at 5.84%. Bank of China offered a competitive rate of 5.88%, while The Mutual Bank and RACQ also stood at 5.89%.
For fixed rates, SWS Bank featured the most competitive three-year fixed rate at 4.99%. Easy Street and BankVic led in shorter terms, with two-year fixed rates at 5.49%. Heritage Bank and People’s Choice Credit Union matched this rate for longer five-year and four-year terms, respectively.
“While home loan rate cuts have been coming in thick and fast, at this stage, it’s difficult to see the RBA lowering the cash rate as early as its first meeting in February next year,” said Laine Gordon (pictured above), money editor at RateCity.com.au.
“NAB’s economic team revised its cash rate forecast last week, pushing out the expected timing of the first official cut from February to May 2025. However, the other big four banks’ economic teams still predict the first RBA cut will be a 0.25 percentage point cut in February 2025.
“Whether the RBA starts cutting in February or May might seem minor, but for families saddled with a big mortgage, it can add up.”
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