Fixed mortgage rate cuts continue

The changes include a new rate of 3.69 per cent for owner-occupier three-year fixed P&I loans with an LVR of 70 per cent or less (a drop of 19 bps) and a new rate of 3.89 per cent for investor three-year fixed rate P&I loans with the same LVR range (a drop of 30 bps).

The sharpest reduction announced by Macquarie (60 bps) is for five-year fixed rates for investor P&I loans with an LVR of 80 per cent or less, which now start from 4.09 per cent.

Superfund-owned bank ME has also announced fixed rate changes for both its member and non-member packages, dropping one to five-year fixed rates by up to 50 bps, effective from 29 March 2019.

Among the changes, ME will cut its two and three-year fixed home loans for its member package (for owner-occupiers paying principal and interest) by 10 and 20 basis points to 3.74 per cent and 3.79 per cent, respectively.

Additionally, ME cut its five-year fixed home loan with a member package (for owner-occupiers paying principal and interest) by 50 bps to 3.99 per cent.

Reflecting on the changes, ME head of home loans Andrew Bartolo said that the lender repriced its products in response to easing funding cost pressures.

“SWAP rates have recently fallen, allowing the bank to source cheaper fixed term funding, which it’s passing on to customers.

“Ninety-four per cent of Australians are experiencing ‘bank-xiety’ or distrust towards their bank post-royal commission, but only 14 per cent are proactively doing something about it. Hopefully, rates like these prompt borrowers unhappy with their bank to review their relationships.

“Fixed rates provide certainty and peace of mind and low fixed rates can save borrowers money.”

Meanwhile, South Australian-based lender HomeStart Finance has announced two-year fixed rate mortgage cuts of up to 15 bps, effective from 1 April 2019.

HomeStart’s changes are as follows:

• HomeStart Home Loan – two-year fixed rate will decrease from 5.24 per cent to 5.09 per cent
• Graduate Loan – two-year fixed rate will decrease from 5.24 per cent to 5.09 per cent
• Low Deposit Loan – two-year fixed rate, first-year rate will decrease from 6.24 per cent to 6.09 per cent, with the second-year rate declining from 5.24 per cent to 5.09 per cent

Macquarie, ME, and HomeStart are the latest lenders to drop their fixed mortgage rates, with Suncorp Bank recently announcing reductions of up to 70 bps.  

Teachers Mutual Bank and Adelaide Bank have also reduced their fixed rates by up to 92 bps against a trend of out-of-cycle variable mortgage rate hikes from several lenders, including Macquarie, throughout 2019 and since the turn of the year.

AMP, MyState, NAB and its subsidiary UBank, the Bank of Queensland, Virgin Money, and ING have all announced rate increases since the start of 2019, in response to funding cost pressures.

The managing director of Finance Brokers Association of Australia, Peter White, accused some banks of charging borrowers for their own “shortfalls”, pointing to the recent dip in wholesale funding costs, which he said should support rate reductions.

“Smaller banks are already cutting rates and some economists are predicting two official rate cuts this year, with the Reserve Bank moving to a neutral bias amid concerns about the slowing global economy and the declining housing market.

“The first official rate cuts of 2019 may be here soon, but going by history, I suspect the banks will protect their massive profit margins by refusing to pass on any cuts in full.”

[Related: ING reprices home loan offerings]