a day ago
‘Good news for borrowers': Major banks slashes interest rates
Lenders are cutting rates and fighting for market share weeks after the Reserve Bank of Australia moved on interest rates.
This time the major banks are fighting over investment loans, with CommBank slashing variable rates for investors.
The major bank, which already offered the lowest investor variable rate, reduced rates even further to 5.69 per cent.
These cuts of between 0.07 and 0.12 percentage points apply to the bank's digital-only investor home loan and are for new customers only.
This follows the RBA reducing the official cash rate by 25 basis points to 3.85 per cent after its May meeting.
All four banks immediately announced they were passing on an interest-rate reduction.
Canstar data insights director Sally Tindall said CommBank's latest move was designed to further consolidate its dominance in the investor mortgage market.
'This cut is good news for new borrowers, but existing CBA investors might be frustrated to see better deals going to new business while they continue to pay more,' she said.
'It will be interesting to see if any of CBA's key competitors chase after it with investor rate cuts of their own. Westpac is best placed to do this with a gap of just 15 basis points between the lowest investor rates from each bank.'
Westpac and ANZ's lowest investor variable rates are 5.84 and 5.89 per cent respectively.
NAB is the only big four bank not offering an investor variable rate under 6 per cent, but the NAB-backed UBank's lowest investor variable rate sits at 5.74 per cent.
'With variable rates likely to come down further, easing the pressure on borrowers across the country, we could see banks' appetite for investor loans increase,' Ms Tindall said.
'Right now, the gap between the average owner-occupier rate and the average investor rate is just 0.22 percentage points; however, this could get even narrower if competition continues to heat up.
While CommBank is lowering interest rates on investment loans, Canstar warns the quality of the property will be a key determinant of whether investors can get the loan.
'The banks aren't likely to be rolling out the red carpet to every borrower,' Ms Tindall said.
'They're going to want quality investments, ideally where the rental return is still strong and the owner has a good track record of paying their loan on time.'
