ING cuts all variable home loan rates

The “big four” banks might be copping flack for not passing on the RBA’s full October cash rate cuts, but one smaller bank has announced a second wave of home loan reductions. ING will cut rates on its suite of variable rate loans, after reducing some fixed rates by 0.75 percentage points earlier this week.

ING announced today that “all our new and existing variable home loan rates will decrease by 0.15% per annum, effective from 16 October, 2019”.

An ING spokesperson told Canstar: “We have reduced our rate to ensure we’re still offering customers the simplest, most effective banking solutions and great associated benefits.”

The cuts will be across the board for new and existing variable home loans. For example, the bank’s owner-occupier, principal and interest variable rate loan is currently listed on its website at 3.23% (comparison rate 3.56%) for a person borrowing $150,000-$500,000 at an LVR of 80% or less. A 0.15 percentage point reduction would bring that rate down to 3.08% (comparison rate yet to be advised by ING).

What’s my new ING variable home loan rate?

ING advised that existing customers would receive a letter stating their new rate and monthly repayment. Customers with a variable rate home loan and with access to their app or online accounts could also calculate their new rate by subtracting 0.15% off their current listed rate, the ING website advised.

“Repayments are a little trickier to calculate as there are a number of things that need to be taken into consideration, like the remaining term of your loan and your loan balance,” the bank’s website stated. “Look out for written confirmation in October that will clearly state your new rate and your new repayment amount.

“Principal & Interest repayments will change from 31 October 2019. Interest Only repayments will change from 1 November 2019. And remember, your variable interest rate won’t change until 16 October, so for now it’s business as usual.”

Why did ING lower home loan interest rates?

The Reserve Bank of Australia (RBA) lowered the official cash rate by 0.25 percentage points on Tuesday to a record low of 0.75%. Banks typically use the cash rate as a guide when setting interest rates on various products, including home loans and savings accounts.

The big 4 didn’t pass on the full cash rate cut – did ING?

While ING did not pass on the full cash rate cut of 0.25% to variable loans in this latest round of cuts, on Monday the bank lowered rates on its fixed-rate products by up to 0.75 percentage points – more than the amount the cash rate was lowered (0.25 percentage points).

Australia’s four largest banksCommonwealth Bank, Westpac, ANZ and National Australia Bank – each announced they would pass on some, not all, of the 0.25 percentage point cash rate reduction to borrowers. The banks have come under heavy criticism from Prime Minister Scott Morrison and Treasurer Josh Frydenberg for not reducing interest rates by more.

Mr Frydenberg said the big banks “have a lot of explaining to do”.

“The Reserve Bank itself has pointed to the lower borrowing costs for the banks and their expectation that these interest rate cuts are passed on. It’s not just the Government that they are going against here, they are also going against the advice of The Reserve Bank,” he told Channel Nine earlier this week.

“People should shop around, get the best deal and make their displeasure known to their banks. The rate cut should be passed on in full, that would be a good thing for consumers.”

Meanwhile, ING had already announced a decrease in its fixed home loan rates on Monday – the day before the RBA board met to set the cash rate for the month – despite widespread acceptance that the cash rate would be lowered at that meeting. The changes to ING’s fixed rate home loans came into effect on 1 October. This is called an “out-of-cycle” interest rate change.

A range of smaller lenders on Canstar’s database did pass on the full rate cut – including Athena, Homestar and Freedom Lend – and many more are also offering variable interest rates below 3%.

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