Nearly 50 lenders now offer variable rates below 6%, even as the RBA signals further rate rises remain on the table
The number of lenders offering at least one variable rate below 6% has risen to 49, up from 38 at the start of June, as competition in Australia's home loan market accelerates ahead of the Reserve Bank of Australia's cash rate decision later today.
According to Canstar data, 60% of lenders listed on Canstar.com.au now have at least one variable rate starting with a five. The increase has been driven largely by cuts to new customer rates, with 31 lenders having reduced their variable offerings since the beginning of June.
Lenders in the sub-6% variable rate club
| Lender | Rate from |
|---|---|
| LCU, Pacific Mortgage Group | 5.69% |
| Horizon Bank | 5.74% |
| Unity Bank | 5.80% |
| Border Bank, Greater Bank, Police Bank, Virgin Money | 5.84% |
| BCU Bank, Bendigo Bank, Freedom Lend, Gateway Bank, Mortgage House, RACQ Bank, Police Credit Union, The Mutual Bank, Transport Mutual Credit Union, Unloan | 5.89% |
| Bank of China, P&N Bank, Southern Cross Credit Union | 5.93% |
| loans.com.au, Northern Inland Credit Union, Woolworths Team Bank, NRMA Home Loans | 5.94% |
| Community First Bank, Bank Australia, Tiimely Home, Up | 5.95% |
| Homestar Finance | 5.98% |
| Australian Mutual Bank, Bank First, Easy Street Financial Services, Firefighters Mutual Bank, Health Professionals Bank, Hume Bank, IMB Bank, ING, MoveBank, Newcastle Permanent, People First Bank, Queensland Country Bank, Reduce Home Loans, Regional Australia Bank, Summerland Bank, Teachers Mutual Bank, The Capricornian, UniBank, Westpac | 5.99% |
Source: Canstar.com.au. Rates based on owner occupier loans. LVR and other requirements apply. Excludes green loans.
Canstar estimates that an owner-occupier who took out a home loan five years ago and has never renegotiated is likely still paying around 6.97%. For a borrower with a $600,000 balance and 25 years remaining, refinancing to a variable rate below 6% could save at least $10,592 over two years, even after accounting for approximately $1,150 in switching costs.
Despite all four major banks now holding the view that the cash rate has peaked, the central bank is expected to maintain a cautious stance. The RBA governor reiterated just two weeks ago that the Board will have "some difficult decisions to make in terms of raising interest rates" if inflation does not come down. The RBA Board is scheduled to meet three further times before the end of the year.
Current big four bank cash rate forecasts
| August meeting | Next move | Forecast | |
|---|---|---|---|
| CBA | Hold | Down | 2 x 0.25 cuts in May 27 + Aug 27 |
| Westpac | Hold | Down | 3 x 0.25 cuts from Aug 27 |
| NAB | Hold | Down | 2 x 0.25 cuts from Q2 27 |
| ANZ | Hold | Down | 2 x 0.25 cuts from Q3 27 |
"Competition in the home loan market is intensifying with lenders sharpening their rates as they battle it out for a bigger slice of the mortgage pie," said Sally Tindall (pictured right), data insights director at Canstar.com.au. "So far we've seen new customer variable rate cuts from 31 lenders since the start of June, including challenger banks Macquarie and Bendigo. What's missing in this mortgage war is the big four – at least for now.
"Borrowers are in a stronger position than they have been in some time, with almost 50 lenders on Canstar now offering a variable rate below 6%. If you haven't reviewed your home loan in a few years, check what rate your bank is offering new customers. If it's lower, use this as the push to ask for a rate review or look for a sharper rate elsewhere.
"While the big four banks now believe the cash rate has peaked, borrowers should not adopt this school of thinking. Currently, core inflation is stuck at 3.6% and still a long way from target. The RBA isn't going to declare the battle with inflation won and done at tomorrow's meeting. The best thing borrowers can do is to prepare for another hike by getting themselves their own personalised rate cut."
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