Heritage Bank has unveiled a one-year fixed rate of 3.99 per cent, which is the lowest rate of any kind in its 139-year history.
The comparison rate is 5.58 per cent, which is based on a $150,000 loan over 25 years. The previous one-year rate was 4.49 per cent.
Chief executive John Minz said Heritage was able to offer such a low rate because as a customer-owned bank it could focus on giving value to members rather than shareholders.
“That mutuality means Heritage Bank can focus on generally delivering more competitive rates than the big four banks,” he said.
Mr Minz also said the 3.99 per cent rate was better than anything offered even during the Great Depression, when the bank’s home loans were priced at about five per cent.
“Our rates went close to five per cent per annum immediately after the Second World War, but then increased as the Reserve Bank of Australia took over the implementation of monetary policy in 1960,” he said.
“We also looked at historical newspaper articles and Australian Bureau of Statistics data to see if we could find any evidence of other banks’ fixed home loan annual percentage rates ever being lower, but found nothing.
“If it’s not the cheapest time to borrow money in Australia’s history, it’s got to be awfully close.”
Heritage’s other fixed rates are also under five per cent, with borrowers able to get 4.49 per cent for two years, 4.89 per cent for three years and 4.99 per cent for five years.