Australian home loan interest rates continue to shift, with Commonwealth Bank, ING, and NAB making changes to multiple offerings.
Commonwealth Bank variable home loan interest rates have been lowered by up to 0.40 percentage points for the first time since last September, with new borrowers who have deposits of at least 30% benefiting the most from these recent changes.
While variable interest rates are trending down, the news isn’t so good for long-term Commonwealth Bank fixed-rate customers, with rates increasing 0.10 percentage points.
For one-year short-term fixed loans, interest rates were slashed by up to 0.20 percentage points, with their one-year fixed package loan receiving a 0.10 percentage point cut, taking it down to 1.99% for owner-occupiers paying principal and interest.
These changes mean that for new borrowers with a 70% loan-to-value ratio (LVR), their principal and interest rate repayment is 2.29%, while for those with an 80% LVR, their rate is 2.39%.
Over at ING, new owner-occupier and investor variable interest rates paying principle and interest were cut by up to 0.25 percentage points.
The offset account-friendly ING Orange Advantage variable rate home loan is down to 2.29% for owner-occupiers if their loan is above $150,000 and their LVR is 80% or less.
Like Commonwealth Bank, ING also increased most owner-occupied fixed rates between 0.05 to 0.20 percentage points, but all ING one-year fixed rates have remained the same.
For owner-occupiers interested in their two-year fixed option, their rate is 1.99% when paying principal and interest with an LVR of 80%.
Like Commonwealth Bank, NAB increased many fixed rate offerings, with their two, three, and four-year fixed rates up 0.10 percentage points, while their five-year fixed has risen 0.20 percentage points.
Will the Reserve Bank hike rates?
Although nothing is confirmed, some experts view these moves as banks preparing for what’s to come.
Marin North, Principal of Digital Finance Analytics, believes that these rate changes have occurred so banks can further promote their variable mortgage variable rate products before the anticipated RBA rate hikes in the coming years.
“What that means is they are now taking out their own insurance policies that if (short term) rates move up faster, they can put those mortgage rates up faster,” he said.
“Whereas, of course, with fixed rates, essentially they have locked themselves into a three-year or four-year scenario.”
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ANZ Bank CEO Shayne Elliott is in favour of RBA raising rates, noting that they are well-positioned for when rates do increase.
“We started the year really well in-home loans and then, of course, we saw just unbelievable levels of volume across the economy in terms of turnover, people buying and selling houses,” Mr Elliott said.
“Clearly, with rates so low here in Australia, essentially at zero, any sort of increase, yes, would be a benefit.”
Increased competition may lead to more regulations
With all of the major banks lowering their variable rates, there may be more strict regulations on the horizon to protect the economy further.
In a note to clients, Macquarie analyst Victor German has suggested the Australian Prudential Regulation Authority (APRA) may need to make further moves besides their recently announced plans that require banks to test if new borrowers can afford their mortgage repayments if rates rise three percentage points.
“If the competitive environment continues to intensify, the impact of recently announced macroprudential changes for owner-occupiers is going to be negligible,” Mr German said.
Words by Rimas Veselis
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