Big four banks follow RBA's call to cut home loan interest rates

All four of Australia’s major banks will pass on Reserve Bank interest rate cuts to new mortgage customers, but many of their existing customers will miss out. Borrowers have been encouraged to take matters into their own hands if need be, and ‘negotiate or switch’ to get a better rate.
Big four banks - CBA, WBC, NAB and ANZ
Some of Australia’s major banks have lowered mortgage rates after the RBA cut. Image source: Vitalii Tairov, Canstar.

Commonwealth Bank was the first to fire out of the major banks this morning, announcing it would drop rates on fixed rate loans for owner-occupiers and introduce its lowest-ever advertised home loan rate.

Westpac followed within a matter of hours, matching the interest rate of CBA’s low-rate fixed home loan offer.

National Australia Bank’s cuts brought its four-year fixed package loan to the lowest interest rate out of the four major banks.

ANZ was the last major bank to announce cuts late on Wednesday.

CBA’s package home loan rate moves:

  • 1 percentage point cut to 1.99% (comparison rate 3.66%): Four-year fixed rate home loan for owner-occupiers paying principal and interest
  • 0.15 percentage point cut to 2.14% (comparison rate 3.83%): Three-year fixed rate home loan for owner-occupiers paying principal and interest
  • 0.15 percentage point cut to 2.14% (comparison rate 3.97%): Two-year fixed rate home loan for owner-occupiers paying principal and interest
  • 0.10 percentage point cut to 2.19% (comparison rate 4.12%): One-year fixed rate home loan for owner-occupiers paying principal and interest

The new rates will be effective from Wednesday, 11 November for loan-to-value ratios (LVR) up to 95%.

Westpac’s package home loan rate moves:

  • 0.80 percentage point cut to 1.99% (comparison rate 3.29%): Four-year fixed rate home loan for owner-occupiers paying principal and interest
  • 0.20 percentage point cut to 2.09% (comparison rate 3.40%): Three-year fixed rate home loan for owner-occupiers paying principal and interest
  • 0.20 percentage point cut to 2.09% (comparison rate 3.50%): Two-year fixed rate home loan for owner-occupiers paying principal and interest
  • 0.20 percentage point cut to 2.09% (comparison rate 3.59%): One-year fixed rate home loan for owner-occupiers paying principal and interest



The new rates will be effective from Monday, 9 November for LVRs above 70%. Westpac told Canstar that an additional discount of 0.10 percentage points applies to loans with LVRs up to 70%.

NAB’s package home loan rate moves:

  • 0.81 percentage point cut to 1.98% (comparison rate 3.69%): Four-year fixed rate home loan for owner-occupiers paying principal and interest
  • 0.20 percentage point cut to 2.09% (comparison rate 3.86%): Three-year fixed rate home loan for owner-occupiers paying principal and interest
  • 0.10 percentage point cut to 2.09% (comparison rate 4%): Two-year fixed rate home loan for owner-occupiers paying principal and interest
  • 0.10 percentage point cut to 2.19% (comparison rate 4.17%): One-year fixed rate home loan for owner-occupiers paying principal and interest

The new rates will be effective from Tuesday, 10 November and will apply to all LVRs, subject to the loan meeting the normal credit approval process, according to a NAB spokesperson.

ANZ’s package home loan rate moves:

  • 0.40 percentage point cut to 2.29% (comparison rate 3.67%): Five-year fixed rate home loan for owner-occupiers paying principal and interest
  • 0.40 percentage point cut to 2.29% (comparison rate 3.77%): Four-year fixed rate home loan for owner-occupiers paying principal and interest
  • 0.20 percentage point cut to 2.09% (comparison rate 3.84%): Three-year fixed rate home loan for owner-occupiers paying principal and interest
  • 0.20 percentage point cut to 2.09% (comparison rate 3.98%): Two-year fixed rate home loan for owner-occupiers paying principal and interest
  • 0.30 percentage point cut to 2.09% (comparison rate 4.13%): One-year fixed rate home loan for owner-occupiers paying principal and interest

The new rates will be effective from Thursday, 5 November.

If you miss out on mortgage rate cuts, RBA says to negotiate or switch

CBA, NAB, Westpac and ANZ are not lowering variable interest rates on their owner-occupier home loans at this stage, but variable rate customers could potentially apply for a fixed rate instead.

Existing customers who are already locked into a fixed rate will miss out on the new fixed loan interest rates.

It is possible, in some situations, to break free from an existing fixed loan agreement, but some lenders may charge what is known as a ‘break cost’ or ‘break fee’ if an existing borrower wishes to end their fixed-term loan before the end of the contract to switch to a different rate or bank.

The cuts from CBA, NAB and Westpac came after a strong message to the banks from Reserve Bank Governor Philip Lowe following the monetary policy update yesterday, where the official cash rate was cut to a historic low of 0.10%.

“I would expect and hope those interest rate reductions get passed through to borrowers,” Dr Lowe said.

If not, he urged Australians to take matters into their own hands.

“I think the best outcome would be for standard variable rates to to be lowered, but if that doesn’t occur I’m confident that they’ll be passed through by people negotiating and switching,” he said.

“I encourage everybody to go and ask their bank for a better deal, and if they don’t give you a better deal after today’s decision, switch to a bank that will.”

 

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

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