Banks slash rates prior to October cash call

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September 25 2020
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Three of Australia’s largest financial institutions have all cut their variable rate charged on mortgages as speculation increases for an October cash rate cut.

Banks slash rates prior to October cash call

Research released by RateCity shows Commonwealth Bank, Westpac and ING are all reducing their rates.

Commonwealth Bank today trimmed some rates across both owner-occupier and investment loans for new customers by up to 0.15 per cent. CBA’s lowest variable rate dropped 0.10 per cent to 2.69 per cent.

The country’s fifth-largest lender, ING, also cut variable rates for new owner-occupier customers today by 0.10 per cent. ING’s lowest variable rate is now 2.49 per cent.

This comes as the second-largest lender, Westpac, launched a 2.19 per cent introductory variable rate a week ago, which reverts to 2.69 per cent after two years.

Rate City’s research director, Sally Tindall, said the RBA has been hinting at a cash rate cut since the middle of the year, but the move seems increasingly likely in the next few months.

“While a cash rate cut next month is on the cards, the board may want to wait until the federal budget is out of the way,” she said.

“Home loan rates might be at record lows, but it’s unlikely we’ve hit the bottom just yet.

“The cuts by CBA and Westpac will force the rest of the home loan market to re-evaluate their pricing. As a result, we’re likely to see some lenders cut their new customer rates further.

However, while banks are starting to reduce rates, some of the smaller lenders are continuing to create competition by undercutting the larger banks.

“At the end of the day, this is great news for home owners, who are in a position to refinance. This kind of competition can potentially put thousands of dollars back into their pockets.

“While the competition in the market is helping refinancers get ahead, complacent mortgage-holders and savers are not benefitting from these cuts,” Ms Tindall said.

While record-low interest rates remain good news for borrowers, on the other end, savers continue to be hurt by reduced rates.

“Savings rates have been tumbling in recent months, and if the RBA cuts again, we’ll see even more accounts offer next to zero interest to Aussies trying to get ahead,” Ms Tindall concluded.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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