It seems the price war between Australia’s lenders is heating up again, with new research showing the various banking institutions are dropping their variable and fixed rate products to new lows.
According to data from RateCity, BMC Mortgage became the first lender to drop its rates out of cycle with the Reserve Bank in 2013, cutting 10 basis points from its variable home loans.
On top of that, RAMS, Newcastle Permanent, the Commonwealth Bank of Australia and Westpac all cut their two-year fixed rates to below five per cent.
Aussie Home Loans took its three-year fixed rate to just 5.29 per cent and its four- and five-year fixed rates to 5.59 per cent.
This latest round of cuts follows December’s dismal lending results, with just 43,885 home loans financed across Australia.
NSW was hit worst, with 24 per cent fewer home loans written in December 2012 when compared with December 2011.
RateCity’s Michelle Hutchison said the slow lending market is changing the way lenders compete for customers.
“We’ve never seen lenders cut variable rates while the Reserve Bank cash rate is on hold. Lenders are obviously feeling the pressure of the slow mortgage market and are doing whatever it takes to attract new customers, including cutting their interest rates out-of-cycle,” she said.
“More borrowers are comparing home loans online at sites like RateCity and searching by best price. Lenders are starting to realise they need to be cheaper if they want to win new borrowers.”