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Banks buck trend and cut rates

Banks buck trend and cut rates

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Charbel Kadib 2 minute read

Three non-major lenders have announced reductions to their mortgage rates of up to 32 basis points, despite out-of-cycle rate increases from competitors.

Heritage Bank, Adelaide Bank, and Teachers Mutual Bank (TMB), have announced reductions to their home loan offerings, despite recent out-of-cycle hikes from NAB and its subsidiary UBank, the Bank of Queensland (BOQ), and Virgin Money.

Effective Friday, 1 February, Heritage Bank will cut interest rates on a range of its investor, principal and interest and interest-only, home loan products.

The bank is set to drop rates by up to 32 basis points, with variable investor rates starting from 4.02 per cent.

Further, effective for all new loan applications lodged as of Tuesday, 29 February, Adelaide Bank has reduced fixed rates on its owner-occupied and investment SmartSaver and SmartFix home loans.

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Adelaide Bank’s owner-occupied fixed rates now start from 3.79 per cent, with investment fixed rates starting from 3.99 per cent.

Member-owned lender TMB has also reduced rates on its fixed rate investment home loan offerings, dropping rates by up to 20 basis points.

Effective from 1 February for new business, TMB's fixed rate investment loans will start from 4.04 per cent. 

Heritage’s head of broker network Stewart Saunders noted that the non-major lender’s decision has bucked the recent trend of interest rate hikes in response to rising wholesale funding costs.   

“At a time when we’ve seen other lenders lifting their rates, we’re going in the opposite direction and making our home loans even more attractive for prospective borrowers across the country,” he, said

The latest lender to lift its mortgage rates was NAB, which announced increases of up to 16 basis points on its variable home loan offerings.

The major bank’s subsidiary, UBank, also announced increases earlier this year, lifting its fixed home loan rates by up to basis points.

The Bank of Queensland and Virgin Money have also repriced their mortgages, increasing rates earlier this month by 18 basis points and 20 basis points, respectively.  

Throughout 2018, several lenders, including ANZ, the Commonwealth Bank of Australia, and Westpac, also increased rates out-of-cycle.

[Related: ‘Front-book focus’ sparking demand for refinancing]

Banks buck trend and cut rates
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Charbel Kadib

Charbel Kadib

Charbel Kadib is a journalist on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel held roles with public relations agency Fifty Acres, and the Department of Communications and the Arts. 

Charbel graduated from the University of Notre Dame Australia with a Bachelor of Arts (Politics & Journalism).

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