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Bankwest, a subsidiary of Commonwealth Bank, has cut up to 1.25% off fixed rate home loans, which coincides with Bank Australia decreasing its Basic Home Loan Special Offer by 0.30%.
It signals a growing trend of lenders offering rates below 3%, and Canstar finance expert Steve Mickenbecker points to lenders jostling for market share as the reason behind the decrease.
“Bank Australia and Bankwest have made an early move cutting home loan rates well ahead of any Reserve Bank decision in February,” he said.
“Competition is heating up in the home loan market with lenders jostling for market share, even in the face of low margins.
“Bankwest has lowered all of its fixed rate home loans, with the largest being a whopping 1.25% cut to its non-packaged 5-year fixed rate for owner occupiers paying principal and interest.
Mickenbecker noted that the cuts place some of Bankwest’s new fixed rates in the lowest priced quarter of loans, but not market leading.
“Bankwest has set the package discount to 0.20%, but the package benefit is greater if the borrower allows the loan to convert to variable at the end of the fixed rate period, enjoying the higher variable package rate discount from then,” he said.
“Bankwest’s comparison rates have reduced only marginally, meaning that the cuts are isolated to the fixed rate period and that borrowers should review their loan prior to fixed rate expiry.
“The decreases to Bankwest’s investment lending rates suggest a rethink and repositioning. Bankwest’s investment loan pricing is now below or at parity with owner occupied for interest only lending, perhaps recognition of the legitimacy of this strategy for investors.
“For the 3-year term it is actually a whole 0.30% lower.”
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