One non-major bank has announced another cut to its fixed rates, which have now fallen by up to 60 basis points in 2014.
Citibank has reduced its one-year fixed rate from 4.74 per cent to 4.59 per cent and its five-year rate from 5.59 per cent to 5.39 per cent.
This follows another rate reduction in January, when Citibank cut 40 basis points from its four- and five-year fixed rate products.
Citibank’s head of third-party retail distribution, Aaron Milburn, said the bank regularly reviewed its rates and its position in the marketplace so it could remain competitive.
“We’ve found the response has been especially positive from brokers and clients who are combining the one-year fixed rate with our standard variable rate, as it combines very attractive pricing with flexibility,” he told The Adviser.
“This will mean greater savings for clients along with certainty of fixed rates. Additionally, our free 60-day rate lock allows customers a guaranteed low fixed rate for 60 days after their application has been submitted, protecting them from rate alterations before their settlement date.”
Mr Milburn also said brokers could continue to expect direct access to credit officers and an overall improved service experience from Citibank in 2014.
Citibank is one of many lenders to have cut rates this year. Bankwest, Homeloans, ING Direct, Investec, Nationalcorp Home Loans, P&N Bank and Pepper have cut rates in the last month alone.
Meanwhile, NAB has told Fairfax Media that fierce competition in the mortgage market has been reducing lenders’ profit margins.
Head of personal banking Gavin Slater also said that record low interest rates were squeezing profit margins.
“Whenever there’s competition you’re going to have margin pressure,” he told Fairfax.
“If I had to predict the future, I don’t see margin spreads going the other way. I don’t see them going up. I think margin pressure is a fact of our industry and I think it reflects competition.”