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Bank drops fixed rates by up to 75bps

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Reporter 6 minute read

MyState Bank has announced that it has dropped rates for new fixed rate owner-occupied home loans as well as fixed and variable rate investment home loans.

Effective from Tuesday (23 January 2018), MyState is reducing its owner-occupied three-year fixed home loan rate by 75 basis points (for borrowers with a loan-to-valuation ratio greater than 80 per cent to 90 per cent) and three-year residential investor rate by 60 basis points (for LVR equal to or less than 80 per cent). 

The rate for owner-occupiers on a three-year fixed loan is now 3.84 per cent (4.92 per cent) on principal and interest repayments, while investors on the same term will be given a rate of 3.99 per cent (4.96 per cent comparison) on a P&I basis (or 4.19 per cent; 5.02 per cent comparison) on interest-only repayments. 

Other fixed rate loans will decrease by between 15 and 40 basis points, bringing the range to 3.84 per cent to 4.79 per cent for owner-occupiers and 3.99 per cent to 4.69 per cent for investors. 

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The bank has also cut variable residential investment loan rates by 20 basis points, with the standard variable rate starting from 5.23 per cent.

MyState Limited’s group executive of broker distribution, Huw Bough, said that the interest rate reductions were consistent with MyState’s commitment to providing broker partners with competitive loan products and services while also prudently managing its loan book.

The executive said: “We have been following a conservative approach for the past few months as we have seen house prices in key metropolitan markets weaken. Now the market is less heated, we have greater capacity for further growth of our loan book. Our focus is on high credit quality rather than growth for the sake of growth. 

“These rate cuts provide a range of highly competitive loan products to brokers and direct benefits to customers, more than half of whom are located outside Tasmania.”

Several lenders have reduced their fixed rates in recent weeks as demand for fixed rate loans falls.

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According to approval data from Mortgage Choice, demand for fixed rate home loans fell every month for the last four months of 2017.

Fixed rate home loans accounted for 22.81 per cent of all loans written throughout December, according to the brokerage.

The fall has been partly attributed to the fact that the Reserve Bank of Australia has kept the official cash rate on hold for more than a year, with borrowers therefore feeling less pressured to lock their mortgage rates.

Mortgage Choice CEO John Flavell said last month that he would not be surprised if there continued to be a slight decline in fixed rate demand.

“We may continue to see more people choose a variable home loan, particularly if the Reserve Bank of Australia continues to leave the official cash rate on hold,” the CEO said. 

[Related: Fixed rate demand continues to fall]

Bank drops fixed rates by up to 75bps
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