The Queensland-based bank cut the rates on its Basic Home Loan for new owner occupier loans with loan-to-value ratios of (LVR) ≤60% and 60-70% and principal and interest (P&I) repayments.

The cuts and new rates are as follows:

Product

Change (%)

New rate

Comparison rate*

Basic Variable (P&I) ≤60% LVR

-0.10

5.99%

6.02%

Basic Variable (P&I)

60-70% LVR

-0.15

5.99%

6.02%

Auswide Bank's Basic Home Loan comes with no monthly or ongoing fees and a redraw facility.

However, there's no option to fix the rate on the Basic Home Loan, and it doesn't allow for an offset account.

Tight mortgage market

Auswide Bank joins a clutch of lenders offering variable home loan rates of under 6% p.a. including unloan, Tiimely (formerly tic:toc), and Heritage Bank.

The former bank's cut comes in the same week the Reserve Bank of Australia board opted to leave the official cash rate on hold at 4.35%.

However, the latest home lending data shows mortgage arrears are rising in Australia, lifting from COVID lows of just 1% in 2022 to 1.6% in the March quarter of 2024.

Property market analyst CoreLogic said higher arrears is linked to a sharp rise in the cost of servicing home loan debt.

The average variable interest rate on an outstanding owner occupier home loan jumped from 2.86% in April 2022 to 6.39% in March 2024.

In monetary terms, this adds almost $1,600 to the monthly repayments for a borrower with $750,000 debt.

Arrears concern

CoreLogic research director Tim Lawless said the upward trend in arrears has been most influenced by non-performing loans (NPL) – those that are at least 90 days overdue for payment.

The rate of NPL arrears was at 0.93% in the March quarter, while loans overdue by between 30 and 89 days comprised 0.68% of overall loans.

As well as higher debt costs, Mr Lawless said cost of living pressures are also consuming a larger proportion of household income.

"There is also the fact that households are more sensitive to sharp adjustments in interest rates, given historically high levels of debt, most of which is housing debt," Mr Lawless said.

"Loosening labour market conditions would also be playing a role."

What's ahead?

Mr Lawless expects mortgage arrears to rise further as unemployment lifts, household savings further deplete, and economic conditions navigate "a period of weakness".

"Arrears are unlikely to experience a material 'blow out' unless labour markets weaken substantially more than forecast," he said.

Homeowners who fall behind on their repayments can take some comfort in the fact that the vast majority of mortgage-holders could clear their debts on the sale of their property.

The RBA recently estimated that only 1% of Australian residential dwellings are in negative equity (that is, the home loan used to buy a property is worth more than the property itself).

CoreLogic noted strict regulations governing how banks must measure a borrower's ability to service a home loan have helped ensure Australia's relatively low mortgage arrears, despite the high interest rate environment.

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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Update resultsUpdate
Filters
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
$2,408
Principal & Interest
Variable
$0
$530
70%
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  • $2,000 for loans up to $700,000
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5.99% p.a.
5.90% p.a.
$2,396
Principal & Interest
Variable
$0
$0
80%
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  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
6.14% p.a.
6.16% p.a.
$2,434
Principal & Interest
Variable
$0
$250
60%
 Featured Unlimited Redraws
  • No annual fees - None!
  • Get fast pre-approval
  • Unlimited additional repayments free of charge
  • Redraw freely - Access your additional payments when you need them
  • Home loan specialists available today
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

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