RBA cash rate cut: Which lenders have lowered home loan interest rates?

The official cash rate has been cut to an all time low of 0.10% in a bid to quicken the economy’s recovery out of recession. While this is likely to see savers bear the brunt of lower rates, the upside is borrowers may be able to pay less in mortgage repayments. In fact, some lenders announced instant rate cuts.
Reserve Bank of Australia
Will banks pass on RBA cuts in November, 2020? Image source: Rose Makin, Shutterstock.

Nearly seven months on from its last movement, the Reserve Bank of Australia (RBA) board decided to cut the official cash rate by 0.15 percentage points to the record low of 0.10% on Tuesday, 3 November, as was widely anticipated.

It’s the first time the central bank has done a ‘micro-cut’ of less than 0.25 percentage points, with the announcement aimed at supporting Australia’s economic recovery from the pandemic while still keeping the cash rate above 0%.

The RBA will adjust some of its other levers that influence the operation of the Australian financial system, too. It will reduce its three-year bond target and the rate on its term funding facility to 0.1%, and cut the interest rate on exchange settlement balances to zero. It will also buy $100 billion worth of government bonds over the next six months.

RBA Governor Philip Lowe said Australia was on its way towards economic recovery, but high unemployment was an “important national priority” and the bank would do what it could to support the creation of jobs.

What does the cash rate cut mean for home loan rates?

Many home owners and prospective borrowers will now be watching to see how their lender responds to the RBA’s cash rate call, as they may be able to secure a cheaper home loan interest rate.

↓ Keep reading to see if your bank is on our list of lenders cutting rates

Homestar Finance, for instance, cut its variable home loan rate even before the cash rate call, dropping its Star Gold home loan to 1.79% (1.84% comparison rate) for new customers who have a loan-to-value ratio (LVR) of up to 60% – or a deposit of at least 40%.

Another lender, Athena, lowered its variable home loan rates on the same afternoon as the RBA announcement, for owner-occupiers and investors, by the full 0.15 percentage point cash rate cut. Both new and existing customers are set to pay the new rates, which will now start from 2.19% (comparison rate 2.19%) on its CelebRATE product for borrowers with a deposit of at least 40%.

Likewise, Reduce Home Loans instantly lowered some of its variable rates, introducing the lowest home loan rate on our records at 1.77% (comparison rate 1.83%) on its Rate Cutter loan, also for borrowers with at least a 40% deposit.

Canstar’s research analysts crunched the numbers and found a hypothetical owner-occupier borrower paying the average rate on our database of 3.31% could save $321 per month and more than $115,000 in total interest by switching to Reduce’s new low rate (excluding fees and assuming rates remain the same over that time)*.

Lenders have been cutting rates all year, with Canstar’s database showing 94 lenders cut variable home loan rates in 2020 by an average of 0.36 percentage points, bringing the average rate on our database down from 3.73% to 3.37% at the time of writing (excluding cuts announced after or shortly before the RBA announcement). Fixed rates have been cut by an average of 0.67 percentage points, by 72 lenders.

Update: The four major banks passed on fixed rate cuts, to existing customers only. See our coverage for the details.

Which lenders have cut mortgage interest rates so far?

The following lenders on Canstar’s database have announced cuts to some or all of their owner-occupier home loan interest rates either just before or in the wake of the RBA’s cash rate decision, listed in alphabetical order (List updated at 11am AEDT on 13 November, 2020):

  • 86 400: cuts of 0.10 percentage points to variable loans and 0.09 to 0.32 percentage points to fixed-rate loans
  • AMP: cuts of between 0.22 and 0.70 percentage points to fixed rates
  • Athena: cuts of 0.15 percentage points to variable-rate loans
  • Australian Military Bank: cuts of between 0.15 percentage points and 1 percentage point to construction and fixed loans
  • Aussie: cuts of 0.20 percentage points to variable loans and 0.07 to 1.25 percentage points to fixed loans
  • Auswide Bank: cuts of between 0.10 and 0.35 percentage points to variable and package rates
  • ANZ: cuts of between 0.20 and 0.40 percentage points to fixed rates
  • Bank of Queensland: cuts of between 0.16 and 0.55 percentage points to fixed rates
  • Bendigo Bank: cuts of between 0.05 and 1.10 percentage points to fixed rates
  • Citi: cuts of between 0.10 and 0.20 percentage points to fixed rates
  • Commonwealth Bank: cuts of between 0.10 percentage points and 1 percentage point to fixed rates
  • CUA: cuts of between 0.40 and 0.52 percentage points to fixed rates
  • Delphi Bank: cuts of between 0.15 and 1.20 percentage points to fixed rates
  • Freedom Lend: cuts of 0.20 percentage points to variable rates
  • Gateway Bank: cuts of 0.05 percentage points to variable-rate loans and 0.10 to 0.30 percentage points to fixed rates
  • Geelong Bank: cuts of 0.10 percentage points to variable rates
  • Homestar Finance: cuts of 0.15 percentage points to variable and fixed rates
  • Homeloans.com.au: cuts of 0.15 percentage points to variable rates
  • Horizon Bank: cuts of 0.20 percentage points to fixed rates
  • HSBC: cuts of between 0.10 and 0.21 percentage points to fixed rates
  • ING: cuts of between 0.05 and 0.50 percentage points to fixed rates
  • Macquarie Bank: cuts of between 0.10 and 0.25 percentage points to fixed rates
  • ME: cuts of 0.15 percentage points to variable rates
  • MyState Bank: cuts of between 0.20 percentage points and 1 percentage point to variable and fixed rates
  • National Australia Bank: cuts of between 0.10 and 0.81 percentage points to fixed rates
  • Newcastle Permanent: cuts of 0.01 to 1.11 percentage points on fixed rates
  • P&N Bank: cuts of up to 0.10 percentage points on variable loans and up to 0.96 percentage points on fixed loans
  • People’s Choice Credit Union: cuts of between 0.10 and 0.85 percentage points to package fixed rates, and 0.75 percentage points to standard fixed rates
  • Pacific Mortgage Group: cuts of between 0.10 and 0.16 percentage points to variable rates
  • Qudos Bank: cuts of between 0.09 and 0.65 percentage points to variable rates
  • RACQ Bank: cuts of between 0.25 and 0.40 percentage points to fixed rates
  • Reduce Home Loans: cuts of between 0.10 and 0.20 percentage points to variable rates
  • Reliance Bank: cuts of between 0.10 and 0.34 percentage points to fixed rates
  • Resi: cuts of 0.15 percentage points to variable rates
  • Summerland Credit Union: cuts of between 0.05 and 0.50 percentage points to fixed rates
  • UBank: cuts of 0.15 or 0.19 percentage points to variable and fixed rates
  • Westpac: cuts of between 0.10 and 0.80 percentage points to fixed rates
  • Yellow Brick Road: cuts of 0.15 percentage points to variable rates

It could be worth checking with any lenders you are considering to confirm which particular loans these rate cuts may apply to, and whether the cuts are available to new customers, existing customers or both.

How much could you save with a cut to repayments?

Canstar analysis revealed that if the average variable rate on a $400,000 loan amount (3.37%) were to come down by 0.15 percentage points then monthly repayments would drop by $33, or $396 annually.

For borrowers with a $1 million loan (current average rate of 3.34%), the calculations show it could save as much as $989 in a year.

Canstar’s researchers found the impacts of a 0.15 percentage point cut to various loan amounts would be as follows:

  • $300,000 (current average rate of 3.38%): $25 monthly repayment reduction, saving $297 annually
  • $400,000(current average rate of 3.37%) : $33 monthly repayment reduction, saving $396 annually
  • $500,000 (current average rate of 3.35%): $41 monthly repayment reduction, saving $495 annually
  • $600,000 (current average rate of 3.35%): $49 monthly repayment reduction, saving $594 annually
  • $700,000 (current average rate of 3.35%): $58 monthly repayment reduction, saving $693 annually
  • $800,000 (current average rate of 3.35%): $66 monthly repayment reduction, saving $792 annually
  • $900,000 (current average rate of 3.34%): $74 monthly repayment reduction, saving $890 annually
  • $1 million (current average rate of 3.34%): $82 monthly repayment reduction, saving $989 annually

Source: www.canstar.com.au – 29/10/2020. *Average owner-occupier variable rate based on principal and interest loans available for the specified loan amount and 80% LVR in Canstar’s database, excluding first home buyer-only and intro rate loans. Monthly repayment calculations based on principal and interest repayments over a 30-year loan term. Calculations assume rates remain the same after the 0.15 percentage point cut. 

 

This article was reviewed by our Sub Editor Tom Letts before it was published as part of our fact-checking process.

Follow Canstar on Facebook and Twitter for regular financial updates.


Thanks for visiting Canstar, Australia’s biggest financial comparison site*

→ Looking to find a better deal? Compare car insurance, car loans, health insurance, credit cards, life insurance and home loans with Canstar. You can also check your credit score for free.

Share this article