The big four banks have announced cuts to small business and home loan rates after the RBA slashed the official cash rate to new record lows.
ANZ, CBA, NAB and Westpac have announced rate cuts to several of their loan products for new borrowers, following the decision by the Reserve Bank of Australia (RBA) to cut the official cash rate from 0.25 per cent to a new record low of 0.10 per cent.
While the majors have been focusing on rate cuts for new customers, several non-bank lenders - including Athena Home Loans, Homeloans.com.au and Mortgage House - have already dropped rates by the RBA's drop of 15 basis points for existing customers, too.
ANZ rate changes
The major bank has announced interest rate reductions for businesses eligible for the government’s Coronavirus SME Guarantee Scheme, including a 0.75 per cent decrease to 4.24 per cent on ANZ’s unsecured Next Step Business Loan, and new fixed rates from 2.85 per cent for those borrowing up to $1 million for new vehicle and equipment purchases.
Both rates will be effective from 11 November.
ANZ has also slashed its fixed home loan rates across one to five-year terms by between 0.20 per cent and 0.40 per cent for owner occupier customers paying principal and interest on ANZ’s Breakfree package.
Effective from today (5 November), the new rates include 2.09 per cent per annum for one, two, and three-year fixed rate loans, and 2.29 per cent per annum for four and five-year fixed rate loans.
Commenting on the rate cuts, ANZ group executive, Australia retail and commercial, Mark Hand said: “The RBA and the Government are rightly focused on supporting the economy by making long-term financing cheaper for small businesses and households during this difficult period. ANZ continues to play its part.
“We have once again weighed up a number of factors in making this decision with our focus today on supporting business recovery while continuing to offer very competitive home loan rates to help our customers and the housing sector.”
CBA rate changes
The Commonwealth Bank of Australia (CBA) has slashed its interest rates by up to 100 bps across its fixed-rate home loans, and cut rates across its business loans, while variable home loan rates remain unchanged.
The changes include:
- 100 bps reduction to 1.99 per cent on new four-year fixed-rate home loans for owner-occupiers paying principal and interest in the wealth package;
- 15 bps reduction to 2.14 per cent per annum on new two and three-year fixed rate home loans for owner-occupiers paying principal and interest in the wealth package;
- 10 bps reduction to 2.19 per cent per annum on new one-year fixed rate home loans for owner-occupiers paying principal and interest in the wealth package;
- 99 per cent per annum secured and 3.99 per cent per annum unsecured business loan rates through the government’s Coronavirus SME Guarantee Scheme, a reduction of up to 51 bps; and
- 49 per cent per annum rates on new three, four and five-year fully secured BetterBusiness loans, which is a reduction of around 50 bps.
Speaking about the rate changes, CBA group executive, retail banking services, Angus Sullivan said: “[The] move by the RBA will lower the structure of interest rates and provide confidence that Australians can borrow over the long term at historically low rates.”
Commenting on the business loan rate changes, group executive, business banking, Mike Vacy Lyle said: “As we have said the whole way through this pandemic, we have a vital role to play in helping Australian businesses through the range of challenges they are facing.
“Following the RBA’s announcement, we are dropping interest rates on our second phase SME Guarantee Scheme loans by up to 51 basis points.”
The new fixed rates and business rates will take effect on 11 November.
In addition, Mr Sullivan announced that owner-occupier customers with deferred home loan repayments who made their home loan repayments on time for at least 12 months prior to their deferral but are unable to recommence their full repayments can remain in their home until at least September 2021 without the fear of repossession.
“We also recognise that many Australian households with deferred home loan repayments feel uncertain about the ongoing financial impact of the pandemic.
“This will give these customers the confidence that they can remain in their home while they focus on improving their financial health. This will hopefully bring peace of mind to our loyal customers,” Mr Sullivan said.
NAB interest rate changes
National Australia Bank (NAB) has similarly cut its fixed home loan interest rates by up to 81 bps, and 200 bps from the rates on its QuickBiz Loan for the next three months.
For owner-occupiers on the NAB Choice Package paying principal and interest (new loans), the changes include:
- 10 bps cut to one-year advertised fixed rate to 2.19 per cent per annum;
- 10 bps cut to two-year advertised fixed rate to 2.09 per cent per annum;
- 20 bps cut to three-year advertised fixed rate to 2.09 per cent per annum; and
- 81 bps cut to four-year advertised fixed rate to 1.98 per cent per annum.
NAB group executive, personal banking, Rachel Slade said the reduction in interest rates are designed to “boost confidence and support credit recovery”.
“This is the sixth reduction in the cash rate during the past 18 months. With interest rates at record lows, we are doing what we can to support home buyers and business owners through COVID-19 while also balancing the impact on our deposit and savings customers,” she said.
“Australia has had our support from the beginning of this pandemic and we will continue to help our customers through to the other side.”
NAB group executive, business and private banking, Andrew Irvine said the 200 bps cut to interest rates on the bank’s QuickBiz product has followed an additional 200 bps reduction in March 2020 at the onset of COVID-19.
“We have also recently introduced a number of initiatives to help businesses recover, including the introduction of automatic merchant choice routing, simplified merchant pricing and the introduction of Pollinate to bring powerful digital sales analytics to our customers.”
According to NAB, the majority of its business customers have market-linked loans, with their loans based off the bank bill swap rate.
The bank said the RBA’s decision to slash the official cash rate has seen this rate drop by around 0.90 per cent in the past 12 months, which has resulted in more than $700 million of lower interest cost for NAB customers.
Westpac rate changes
Westpac has also decreased its interest rates for home loan and small-business borrowers, including lowering fixed home loan rates and reducing rates on small-business loans.
Westpac has reduced fixed interest rates for owner-occupied home loan customers on principal and interest repayments with a Premier Advantage package, including:
- Fixed interest rate of 1.99 per cent per annum on a four-year term; and
- Fixed interest rate of 2.09 per cent per annum for one, two and three-year terms.
The fixed interest rate changes for home loan customers are effective Monday, 9 November.
The major bank has also reduced rates for eligible new business loans provided under the federal government’s Coronavirus SME Guarantee Scheme, including:
- Fixed interest rate of 2.38 per cent per annum for terms of three to five years, a reduction of up to 0.56 per cent per annum (fully secured business loan of up to $1 million with a fixed interest rate of 2.38 per cent per annum when secured by a mortgage over owner-occupied commercial real estate and borrowers apply by 18 December 2020); and
- Variable interest rate of 3.09 per cent per annum on new fully secured small-business loans, a reduction of 0.29 per cent per annum.
The small-business interest rate changes are effective Friday, 13 November.
Speaking on the interest rate reductions for small-business customers, Westpac's acting chief executive for the consumer division, Richard Burton, said: “We recognise it has been a tough time for many Australian households, and these changes mean that customers will be able to access even lower interest rates on our home loan and small-business loans.
“However, we are in an extraordinary period with the official cash rate at a historical low and unconventional monetary policy measures in place. It is critical we carefully manage interest rate changes while continuing to do our part in supporting customers and the economy.”
Westpac's CEO of its business division, Guil Lima, added: “Small businesses are a major employer of Australians and have an important role in helping with the nation’s longer-term economic recovery.
“We have made significant reductions to some small-business loans to support lending and growth, as part of our ongoing efforts to assist small businesses during the pandemic.”
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