Record low set for fixed rate loans
Boutique lender Greater Bank has set a record low for a fixed rate loan, signaling rising competition for lenders around short-term fixed rates.
Boutique lender Greater Bank has set a record low interest rate for a fixed rate loan, signalling rising competition for lenders around short-term fixed rates.
Greater Bank announced this week that it had slashed its one and two-year fixed rate loans for owner-occupiers to 1.59 per cent, the lowest fixed rate ever offered in Australia.
The rate is available for homeowners with properties in New South Wales, Queensland and the ACT.
Analysis by Canstar shows that if a homeowner refinances a $500,000 mortgage from the average variable rate of 3.14 per cent to a two-year fixed rate of 1.59 per cent, they could save up to $9,576 over the term of a new loan.
Greater Bank’s move follows cuts to two-year fixed rate loans by St George Bank, Bank of Melbourne and AMP.
In total, seven lenders have cut two-year fixed rate loans in the last month, while two lenders have slashed one-year fixed rate loan rates.
RateCity.com.au research director Sally Tindall said the moves were an indication that banks were willing to battle on short-term fixed rate loans at the same time that longer-term fixed rates were broadly on the rise.
“Greater Bank has thrown down the gauntlet to its competitors, dropping to a new record low,” Ms Tindall said.
“(RBA) Governor Lowe’s insistence the cash rate will not rise until at least 2024 has given lenders the assurance they need to keep their short-term fixed rates ultra-competitive.
“While most banks’ revert rates are significantly higher, these new fixed rates from Greater revert to a competitive 2.19 per cent, but only for new customers under certain terms and conditions.
“This might be the lowest mortgage rate in Australia’s history, but before you jump in, make sure it suits your finances.”