While all of the big banks passed on this month’s 25 basis point rate increase by the Reserve Bank of Australia (RBA) in full, a narrow spread of 0.07 per cent remains between the comparison rates on the major’s standard variable rates.
At 6.12 per cent, the Commonwealth Bank of Australia (CBA) and the National Australia Bank (NAB) have the lowest comparison rate, fractionally ahead of the Australian and New Zealand Banking Group’s (ANZ) 6.16 per cent and Westpac’s 6.19 per cent.
The RBA is widely expected to push the official cash rate higher in the coming months, which would see comparison rates climb further. There is also the very real chance of banks moving on rates independent of the RBA as funding costs continue to pressure bank margins.
Despite the recent hike to the cash rate, Vincent Turner, business manager of Pisces Communication, told Mortgage Business it was pleasing to see comparison rates were still relatively low.
“It is a great market to buy a property at the moment – especially for investors. Investors are currently getting a 4 to 5 per cent rental yield on their property, which is fantastic seeing as their interest rate would be in the low 6 percentile range,” he said.
However brokers were not just relying on the comparison rate when assessing products for their clients.
Mr Turner also said while the comparison rate allowed brokers to give their customers a better understanding of their home loan, he said more brokers were using annualised percentage rates to show their customers the ‘true cost’ of their loan.
Mortgage Business last contrasted each of the major’s comparison rates in February this year, two months before the RBA reduced the official cash rate to the 49 year low of 3 per cent.
At that time CBA delivered the lowest home loan comparison rate at 5.86 per cent, which reflected a spread between the majors’ comparison rate’s on variable rate products of 0.19 per cent.
St George recorded the highest comparison rate of 6.05 per cent, while ANZ and Westpac offered comparison rates of 6.01 and 6.04 per cent respectively.
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