Mortgage rates continue to drop to new lows

The most recent rate reduction comes from National Australia Bank (NAB), which yesterday (18 March) reduced rates for its two-year NAB Choice Package home loans to 1.89 per cent (comparison 3.97 per cent).

The new rate is for owner-occupiers paying principal and interest (P&I) and is a 15 basis point drop on its previous rate.

The two-year fixed rate for investor loans also fell, dropping by 15 bps to 2.29 per cent (4.51 per cent comparison) for P&I repayments and by 10 bps to 2.49 per cent (4.60 per cent comparison) for interest only.

The new rates were made effective from 18 March for new loans, as well as for existing loans where a customer switches from a variable to a fixed rate.

Meanwhile, on Wednesday (17 March), Homestar Finance brought out a special 1.74 per cent rate (2.23 per cent comparison) for owner-occupiers taking out a two-year Star Classic Fixed Special loan on P&I repayments.

The loan is available for customers with deposits of 20 per cent or higher and reverts to a rate of 2.24 per cent.

It is believed to be the lowest national fixed rate in market, making Westpac’s two-year Fixed Options Home Loan of 1.79 per cent (3.36 per cent comparison) the second lowest. While Greater Bank is offering one-year fixed rates at 1.69 per cent, these are only available in NSW, Queensland and ACT.

Variable rates have also been falling.

At the beginning of this week (15 March), non-bank lender Resimac reduced rates by up to 88 basis points (bps) and waived some of its fees across its Prime Alt Doc range of home loans.

The lender slashed interest rates to 2.99 per cent per annum (3.03 per cent per annum comparison rate) for owner-occupied principal and interest (P&I) loans for both 70 per cent and 80 per cent loan-to-value ratio (LVR).

This represents a reduction of 48 bps at 70 per cent LVR and 88 bps at 80 per cent LVR.

The lender also announced similar reductions for investor loans and loans with interest-only repayments.

Similarly, it reduced the interest rates of its Specialist Full Doc and Specialist Alt Doc products by 50 bps across the entire range of loan-to-value ratios (LVR), with interest rates starting from 3.37 per cent pa (3.47 per cent pa comparison rate). 

The non-bank has also waived the risk fee for all Specialist products (up to and including 70 per cent LVR) and rolled back some of the temporary loan verification requirements introduced in 2020.

Resimac’s general manager, distribution, Daniel Carde, commented: “We are cutting interest rates and waiving some of the risk fees across our wide range of our Specialist lending products in order to help a broader cross-section of borrowers improve their financial health as the economy returns to normal.”

The competition for borrowers – and record-low cash rates – has meant that the vast majority of prime lenders are now offering rates under 2 per cent.

Moreover, according to RateCity mortgage market analysis, 33 lenders have cut fixed home loan rates in the last two months on 456 mortgage rates.

[Related: Third-party originated loans rise 28%: APRA]