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Heritage Bank cuts mortgage rates by up to 30 bps

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Reporter 4 minute read

The customer-owned bank has announced cutting the interest rates on a range of its variable and fixed rate home loans. 

Heritage Bank has revealed its decision to reduce its fixed rates on home loans by up to 30 basis points, as well as its variable rates by up to 10 basis points for new borrowers.

The lowest rate on a new variable rate home loan at Heritage is 3.32 per cent p.a., the bank said. 

The new rates come into effect next Tuesday, 6 August 2019. 

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Heritage Bank CEO Peter Lock said it was important for the bank to offer competitive rates as it prepares to open its first interstate branches in NSW this year. 

“We have just announced that we are expanding our branch network outside of Queensland for the first time, with branches to open in Castle Hill and Parramatta later in 2019,” he said.

“The Sydney housing market is expensive, so we want to offer potential customers in NSW competitive rates to help them afford to buy a place of their own.”

After announcing the Toowoomba-based bank’s plans to expand its branch footprint, Mr Lock commented that he “firmly believed” the discussion around “the imminent demise of physical branches is exaggerated”. 

“People still want to come into a branch and talk face-to-face with an expert about the biggest financial commitments they will make in their lives, so branches will be around for many years to come,” he said at the time. 

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Late last month, in response to the Australian Prudential Regulation Authority’s changes to its home lending guidance, Heritage Bank revealed that it would lower its interest rate floor for home loan serviceability assessments from 7.15 per cent to 5.75 per cent and increase its buffer rate from 2.2 per cent to 2.5 per cent, effective from Thursday (1 August).

“The previous floor rates and buffers were simply no longer appropriate, given the historic low interest rate environment we are now in,” Mr Lock said following the announcement at the end of July. 

“We welcome the opportunity to review and lower our serviceability floor. This change will make it easier for people to qualify for a home loan, or to borrow more, without adding extra risk.

“Prudent measures are still in place to ensure people can afford their loan, but we’ve been able to remove what had become an artificially high barrier to home ownership.”

[Related: Heritage revises assessment rates]

Heritage Bank cuts mortgage rates by up to 30 bps
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