How The August Rate Cut Affected Personal Loans

The Australian cash rate is at just 1.50%. Here’s what the current Reserve Bank (RBA) rate means for personal loans.

Whenever there’s a cut to the cash rate from the Reserve Bank (RBA), we put the spotlight on our banks and whether they’re passing on this cut to home loan customers. But what about personal loans? Lenders ought to pass on the rate cut to these products too, right?

Well, sometimes, but in reality the cost of funding for personal loans is based on more than simply the official cash rate. Find out more about how the cash rate affects personal loans here.

How personal loan rates changed since the last official cash rate cut

Out of the 73 providers of personal loans rated by Canstar in 2016, 12 have reduced some personal loan rates (as of 1 November 2016) for new customers since the August 0.25% RBA rate cut.

From these institutions, there were a total of 19 personal loan products that reduced interest rates. These 19 personal loans are displayed in the table below, along with their associated rate change. We’ve sorted these products from largest rate cut to smallest.

Unsecured Personal Loan Decreases 1/09/2016 to 01/11/2016
Company Product Min Loan Amount Max Loan Amount Min Loan Term ( Years) Max Loan Term (Years) Decrease (%)
Bank of Melbourne Unsecured Variable Personal Loan $3,000 $40,000 1 7 -1.75
BankSA Unsecured Variable Personal Loan $3,000 $40,000 1 7 -1.75
St.George Bank Unsecured Variable Personal Loan $3,000 $40,000 1 7 -1.75
Commonwealth Bank Fxd Rate Personal Loan- Unsecured $5,000 $50,000 1 7 -1.50
Bank of Melbourne Unsecured Fixed Personal Loan $3,000 $40,000 1 5 -1.36
BankSA Unsecured Fixed Personal Loan $3,000 $40,000 1 5 -1.36
St.George Bank Unsecured Fixed Personal Loan $3,000 $40,000 1 5 -1.36
Bankwest Unsec Basic Personal Ln $5,000 $50,000 3 7 -1.00
RateSetter Unsecured Personal Loan $2,001 $55,000 0 0 -0.73
RateSetter Unsecured Personal Loan $2,001 $55,000 1 1 -0.73
RateSetter Unsecured Personal Loan $2,001 $55,000 2 2 -0.71
RateSetter Unsecured Personal Loan 4yr – Fxd $2,001 $55,000 4 4 -0.36
RateSetter Unsecured Personal Loan 5yr – Fxd $2,001 $55,000 5 5 -0.34
ANZ Assured $500 $1,000 0 0 -0.14
ANZ Personal Overdraft $1,000 $100,000,000 0 0 -0.14
RateSetter Unsecured Personal Loan – Fixed $2,001 $55,000 3 3 -0.04

 

Secured Personal Loan Decreases 1/09/2016 to 01/11/2016
Company Product Min Loan Amount Max Loan Amount Min Loan Term ( Years) Max Loan Term (Years) Decrease (%)
BOQ Car Loan Fixed $5,000 $80,000 1 7 -3.60
Illawarra CU NSW Car Loan (New) $10,000 $100,000 1 5 -0.15
RACV Fast Approval Secure Personal Loan $5,000 $100,000,000 1 5 -1.20
Horizon Credit Union New Car Loan Fixed $0 $100,000,000 1 5 -0.20
Catalyst Money Car Loan (New) $10,000 $100,000 1 5 -0.15

Source: www.canstar.com.au

Information provided to CANSTAR by product providers. Products sorted by size of rate cut.

As you can see, the average rate cut was an impressive -0.97%, which is significantly more than the RBA rate cut of 0.25%!

However, this drastic cut in personal loan rates was driven in part by BOQ reducing its Car Loan Fixed by 3.60%. So there’s more to personal loan interest rates than the Australian cash rate!

Lowest rate personal loans on Canstar database (As at 1 November 2016)

Currently on Canstar’s database, when searching for personal loans for an amount of $20,000 over 5 years, there are secured personal loans with an advertised interest rate as low as 4.24% (comparison rate* 6.37%) and unsecured personal loans with an advertised interest rate as low as 5.99% (comparison rate* 7.01%).

See for yourself – make your own comparison using our personal loans selector.

Compare Personal Loans

*Comparison rate is the combination of the nominal interest rate (per annum) and any foreseeable fees and charges associated with the loan. Read the Comparison Rate Warning.

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