This article is from the Australian Property Journal archive
AUSTRALIA’S largest lender, the Commonwealth Bank, has reduced its home loan rates in a bid to win new customers.
The CBA’s decisions comes as the latest Australian Bureau of Statistics data shows the value of new loans to owner occupiers and investors have fallen by 13.9% and 29.1% respectively in the past 12 months.
The CBA has dropped the five-year fixed rate loan for owner occupiers by up to 0.30% to 4.09%, and the three-year and four-year fixed rate by 0.1% to 3.79% and 4.09% respectively.
There was also some good news for investors, the two-year rate reduced by 0.1% to 3.89%.
The cuts only apply to customers taking out a new fixed-rate loan, not existing.
Ratecity research director Sally Tindall said after a year and a half of subdued growth in home loans, the banks are hungry to bolster their books through competitive pricing.
“After a year of frugal lending practices, some banks have realised they need to hit a more sustainable medium when it comes to home lending.
“Australia’s biggest home loan lender is one of dozens of lenders looking to get new business in the door by dropping fixed rates.” Tindall said.
The CBA has followed in the footsteps of the National Australia Bank and Westpac.
ANZ has yet to make a move, although that is only a matter of time. Its CEO Shayne Elliott admitted in February that it had been overly conservative in implementing tighter lending practises.
ANZ underperformed when compared to its competitors. Australia’s home loan system growth was 4.2% across 2018, while ANZ’s was 1.0%, by $2.7 billion, in the same period.
Last month ANZ declared it was bringing back 90% LVR, reversing a 2017 decision to increase the deposit requirement to 20%, as well as introduce new 10-year interest-only loan products.
Amidst all the banks cutting loan rates, economists are also tipping that the Reserve Bank of Australia will cut interest rates as early as August.
Capital Economics’ economists Marcel Thieliant and Ben Udy predict the official cash rate will fall to as low as 0.75% by the middle of next year, whilst AMP Capital chief economist Shane Oliver said it will be 1% by the year end.
Australian Property Journal
