Fixed loan frenzy, as 88% of home loan market yet to announce ANY discounts
- 12% of lenders monitored by finder.com.au have announced cuts in the 24 hours since the RBA decision to drop the cash rate to 1.5%
- Number of homeowners fixing loans has spiked by 55% in 12 months, with more tipped to follow
- The best three-year fixed home loan rates on the market right now
3 August, 2016, Sydney, Australia – Twenty-four hours after the Reserve Bank slashed the cash rate to an unprecedented low of 1.5%, just nine lenders – equivalent to a measly 12% of the home loan marketplace – have announced they will be passing on savings to customers, which will prompt more Australians to lock in fixed rate deals, according to finder.com.au, Australia’s most visited comparison website.
Most home loan customers won’t benefit from the full impact of yesterday’s historic interest rate cut. Of the 75 lenders monitored by finder.com.au, just two – Bank Australia and Bank of Sydney – have passed on the entire 25 basis point discount.
While the Big Four were quick to announce a rate discount following yesterday afternoon’s decision, none have passed on the cut in full, but rather, on average, just 12 basis points. Westpac has been the most generous of the Big Four, announcing a discount of 14 basis points on standard variable loans.
Big Four rate discounts
|Bank||Old rate||New rate||Cut|
|ANZ||5.37%||5.25%||12 basis points|
|CBA||5.35%||5.22%||13 basis points|
|NAB||5.35%||5.25%||10 basis points|
|Westpac||5.43%||5.29%||14 basis points|
|Mortgage size||Old rate*monthly repayments||25bp cut monthly repayments||25bp cut30 year savings||12bp cut monthly repayments||12bp cut30 year savings|
|source: finder.com.au, *based on average variable rate across ANZ, Commonwealth, NAB and Westpac banks.|
Analysis from finder.com.au shows a customer who is only getting the 12 basis point discount may save up to $14,451 less over the life of a $500,000 loan compared to those with smaller lenders who are passing on the full 25 basis point discount.
Two thirds of the 41 experts in the latest finder.com.au RBA Survey are predicting the cash rate to bottom out at 1.5%. Meanwhile, demand for fixed-interest home loans is soaring as borrowers rush to lock in lowest-ever mortgage deals.
According to Australian Bureau of Statistics housing finance data, as analysed by finder.com.au, the number of fixed-rate home loans has risen 55% in 12 months. More than one in seven home loans are now fixed.
On finder.com.au, in the 24 hours since yesterday’s announcement, there’s been a 115% increase in the number of people searching for 3-year fixed-rate loans compared to the same period last month.
Bessie Hassan, Money Expert at finder.com.au, expects that the proportion of borrowers fixing their home loans will continue to rise at an even faster pace now that rates have sunk to what many believe is as low as they will go this cycle.
“Those who are torn about whether to fix their home loan, might consider fixing part of their loan and leaving part variable. This way, you can get the best of both worlds,” she says.
Ms Hassan says Australian borrowers are fed up with partial cuts being passed on by the banks.
“In the past two years the cash rate has dropped four times but the big banks haven’t kept pace,” she says.
Research by finder.com.au shows while the cash rate has dropped by 100 basis points in two years from 2.5% in August 2014 to 1.5% in August 2016, the average variable interest rate across the big four banks has only dropped by 53 basis points.
Ms Hassan says for those borrowers considering fixing their mortgage, it’s important to shop around, because rates and fees can vary significantly between lenders.
“Once you are locked into a fixed home loan, it can be very hard and expensive to switch so find the best deal from the outset,” she says.
Current top three-year fixed rate deals on finder.com.au:
- loans.com.au 3 Years Fixed Special Offer (LVR <80% Owner Occupier), 3.67%
- UBank UHomeLoan - 3 Year Fixed Rate (Owner Occupier), 3.69%
- HSBC Premier Fixed Rate Home Loan - 3 Years Fixed (Owner Occupier only), 3.69%
Stay up to date with which banks are passing on rate cuts on this page.
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The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on finder.com.au's review pages for the current correct values.
finder.com.au is Australia's most visited comparison website and has helped over 4.8 million Australians find better credit cards, home loans, life insurance, shopping deals and more since 2006. finder.com.au compares 250 credit and debit cards from 31 providers, over 300 home loan products, and information from 13 life insurance providers as well as online shopping promo codes, mobile phone plans, travel insurance and more. One Australian every five minutes is using finder.com.au to find better (Source: Google Analytics).