It started a month ago with National Australia Bank becoming the first of the big four to take the axe to fixed rate loans in 2024.
At the time, it was seen as a bold move by one of the major banks to drop a hefty 60 basis points and advertise a fixed rate with a '5' in front of it.
But it sparked similar fixed-rate action from its peers with Macquarie, Westpac, and CommBank following suit and a flurry of smaller lenders also getting in on the act in recent weeks.
CommBank took it a step further on Friday when it also took 20 basis points off some of its variable home loan rates for owner occupiers and up to 35 basis points off some variable investment loans.
This week, the conga line of smaller lenders making big swipes at fixed rate home loans continues.
It seems the home loan market has arisen from its recent slumber. Let's check the latest movements.
Westpac-owned banks follow fixed rate plunge
It's no surprise the Westpac-owned trio of St George, Bank of Melbourne, and BankSA all followed their leader to slash fixed rate lending by up to 75 basis points this week.
The standout rate is 5.84% p.a. (7.41% p.a. comparison rate*) for two-year fixed principal and interest (P&I) loan for loan-to-value ratios (LVR) <70% - a cut of 65 basis points.
The same rate applies across all three banks under variously named package deals with a $395 annual fee.
The hefty cuts apply to a wide range of fixed rate owner occupier and investor loans, as well as P&I and interest only (IO) products.
Regional Australia Bank cuts fixed and variable rates
The regional New South Wales bank joined the party making significant cuts to its fixed rates and more modest adjustments to its variable Mortgage and Mortgage Offset rates for owner occupiers and investors.
Owner occupiers need a healthy deposit to snare the lowest variable rates for a mortgage offset home loan.
The new rates for P&I repayments are as follows:
| Product | Change (%) | New Rate | Comparison rate* |
|---|---|---|---|
| Mortgage Offset LVR 60% or less | -0.09 | 6.20% p.a. | 6.21% p.a. |
| Mortgage Offset LVR 70% or less | -0.23 | 6.25% p.a. | 6.26% p.a. |
| Mortgage Offset LVR 80% or less | -0.36 | 6.30% p.a. | 6.31% p.a. |
| Mortgage Offset LVR 90% or less | -0.15 | 6.68% p.a. | 6.69% p.a. |
| Mortgage Offset LVR more than 90% | -0.29 | 7.10% p.a. | 7.11% p.a. |
Regional Australia Bank's fixed rates also feature quite a few numbers under the 6% mark.
These are more prevalent for borrowers with LVRs under 80% and fixing for longer periods.
Heritage tweaks fixed rates
The Queensland-based lender took more measured cuts to its fixed rates this week, taking 10 basis points of its standard and Home Advantage residential and investment loans.
Heritage's headline fixed rate for new lenders is 5.99% p.a. (8.05% comparison rate* or 6.51% p.a. as part of package) fixed for three years for owner occupier P&I loans.
It's worth noting Heritage's fixed loans allow free unlimited extra repayments and free online redraw of advance payments.
Horizon Bank drops Home Sweet variable rates
The NSW south coast-based bank has shaved 10 basis points off its Home Sweet Home discount variable rates for LVRs ≤70%.
Horizon's new headline rate is 5.89% p.a. (6.59% p.a. comparison rate*) for owner occupiers paying P&I, which includes a 0.5% p.a. discount for two years to new borrowers.
The offer comes with no establishment fees and no bank solicitor or valuer fees.
HSBC cuts fixed, ups variable rates
The Hong Kong-based bank also took 40 basis points off a range of its Fixed and Home Loan Package rates for both owner occupiers and investors this week.
Its new best fixed rate is a competitive 5.59% p.a. (6.46% p.a. comparison rate*) for owner occupiers with LVRs between 60-80% taking out a package loan fixed for three years.
The rate jumps to 5.99% (7.19% p.a. comparison rate*) for non-package borrowers.
At the same time, HSBC lifted rates on its Home Loan Package Home Smart owner occupier and investor loans by 10 basis points.
Other rate cutters this week
Firefighters Mutual Bank and another of its divisional entities UniBank dropped their Your Way Basic and Standard variable home loans for owners and investors by 10 basis points.
Finally, the customer-owned Hume Bank has sliced 30 basis points off its myBlue fixed loans for both owner occupiers and investors.
What's behind the fixed rate freefall?
Judo Bank chief economist Warren Hogan told the Savings Tip Jar podcast this week the recent moves by the big banks to cut fixed interest rates were more a matter of the banks taking advantage of lower wholesale funding rates rather than a view of the economy.
Government bond yields have fallen notably since the weaker-than-expected CPI for June, indicating global markets are still widely pricing in a cash rate cut by the end of 2024.
"So, the banks are not taking any view on interest rates there, but the market is," Mr Hogan said.
"They're the ones who think an RBA rate cut is imminent [but] the bank itself, it's just going into that market and taking advantage of the price in the market."
However, Mr Hogan singled out CommBank, Australia's biggest home lender, for its move to lower its variable rates.
"That is CBA taking a view. There's a bit of confidence in the background there," Mr Hogan said.
"But that's really the market competition view that says we want to get market share in mortgages from ANZ, or Westpac, or NAB."
CommBank remains the outlier among Australia's big four banks in sticking with its forecast of a cut in the cash rate in November.
The other three big banks have pushed their forecasts out to early to mid-2025.
But Mr Hogan said the CommBank move to drop some of its variable rates is a marker the "market backdrop has shifted" to greater confidence there won't be a cash rate hike.
However, he said he didn't necessarily agree with that view.
You can listen to the full podcast with Mr Hogan below:
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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.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
6.04% p.a. | 6.06% p.a. | $3,011 | Principal & Interest | Variable | $0 | $530 | 90% | 4.6 Star Customer Ratings |
| Promoted | Disclosure | |||||||||
5.99% p.a. | 5.90% p.a. | $2,995 | Principal & Interest | Variable | $0 | $0 | 80% | Apply in minutes |
| Promoted | Disclosure | |||||||||
6.09% p.a. | 6.11% p.a. | $3,027 | Principal & Interest | Variable | $0 | $250 | 60% |
| Promoted | Disclosure | ||||||||||
5.69% p.a. | 6.16% p.a. | $2,899 | Principal & Interest | Fixed | $0 | $530 | 90% |
| Promoted | Disclosure |
Image by Gabriel Meinert on Unsplash
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