Powered by MOMENTUM MEDIA
the adviser logo
Lender

Neobank makes second home loan rate cut

by Malavika Santhebennur5 minute read
Neobank makes second home loan rate cut

86 400 has announced a cut to its variable home loan rates for new and early lending, reducing its variable rate for the second time this month.

The bank is offering an extra 10 bps rate cut on its Own Home Loan for only a limited period, with applications needing to be received by 30 June.

The latest rate cut follows the neobank’s full rate cut for new and existing customers following the Reserve Bank of Australia’s (RBA) decision to cut the official cash rate by 25 bps from 0.75 per cent to 0.5 per cent.

86 400’s variable rate for owner-occupiers paying principal and interest started from 2.84 per cent following the RBA’s cash rate cut announcement.

Advertisement
Advertisement

The latest announcement sees the neobank’s post-March RBA rate cut total to 35 bps for new lending.

86 400 is calling this the Founders Club Offer, and said it is open to those who already have a loan with the bank, as well as to new customers who apply for a loan by 30 June.

Lending product lead Melissa Christy said all new variable rate applications received by this date and any existing variable rate customers will receive the 10 bps rate reduction on their rate for the life of the loan.

This means the margin applied to applicable loans will be -1.36 per cent per annum, an increase from -1.26 per cent, for the life of the loan against the applicable variable base rate.

“We’re still new in our home loan journey and wanted to acknowledge and reward our first and early home loan customers,” Ms Christy told The Adviser.

Based on this offer, the current variable rate for an owner-occupied principal and interest loan is 2.74 per cent per annum.

Financial comparison website Canstar noted that 86 400 was still not among the lowest variable rate offers on the website despite the reduced rates.

Canstar group executive, financial services, Steve Mickenbecker, said two rate cuts from 86 400 in a fortnight was indicative of a competitive home loan market, where lenders need “sharp” rates to increase market share.

“It’s been a fortnight of mixed news for neobanks, with Xinja pausing new savings account openings, yet this home loan special offer from 86 400 is a positive signal for the sector,” he said.

When asked if 86 400 may have to take similar steps as Xinja, CEO Robert Bell told The Adviser that his firm launched its Pay and Save accounts last September and followed that up with launching mortgages products less than two months later.

“This has ensured we can build a stable balance sheet and remain open during market fluctuations,” he said, adding his firm’s rates are always under review.

86 400 announced last week it followed the four major banks and sliced interest rates on its savings account product from 2.25 per cent to 2.00 per cent.

While acknowledging the interest rate cuts “aren’t good news for savers”, Mr Bell said the neobank was built “to be a genuine, lasting alternative to the big four”.

“To get there, we need to have a responsible, sustainable business model that enables us to operate in a low interest environment,” Mr Bell told The Adviser.

“That’s why we’ve focused on both sides of the ledger (deposits and lending) from day one. Our rates are always under review.”

Mr Bell said the neobank will soon make an announcement on its capital raise.

[Related: Major banks, neobank drop savings rates]

percent arrow down ta

Malavika Santhebennur

Malavika Santhebennur

AUTHOR

Malavika Santhebennur is a content specialist at Momentum Media, focusing on mortgages and finance writing.

JOIN THE DISCUSSION

You need to be a member to post comments. Register for free today

MORE FROM THE ADVISER

PhilipLowe mb

RBA attempts to curb runaway inflation

On Tuesday (5 July) the Reserve Bank of Australia (RBA) announced at its monetary policy meeting it will increase the...

READ MORE
flood qld suburbs ta

Home loan support offered to NSW flood victims

Widespread persistent heavy rain over large swathes of NSW over the weekend and into Monday (4 July) has caused major...

READ MORE
Dr Jane Rennie CPA

Accountants to decline ‘capacity to repay’ requests

The leaders of CPA Australia, the Institute of Public Accountants (IPA), and the Chartered Accountants Australia and...

READ MORE
magazine
Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more