Another Lender Slashes Its Rates

Posted on 2/09/2019  
Another Lender Slashes Its Rates

Citibank has reduced mortgage rates across its home loan product suite, effective for new business from 26 August.

The non-major lender is the latest in a spate of both majors and non-majors reducing their rates, in response to eased guidance from the banking regulator and all-time low cash rates set by the Reserve Bank of Australia. 

The changes apply to loan amounts of $750,000 and over in NSW and Victoria and for loan amounts of $500,000 and over in all other states and territories.

Citi’s variable owner-occupied P&I home loan rates will now start from 3.21% (3.26% comparison rate), while its fixed owner-occupied P&I rates will now start from 2.99% (4.61% comparison rate).

Further, Citi’s variable investment loans with interest-only terms will now start from 3.74% (3.88% comparison rate), while fixed investment loans interest-only terms will start from 3.69% (4.89% comparison rate).

Earlier, Westpac’s subsidiaries (the Bank of Melbourne, BankSA and St.George Bank) also slashed fixed rates across their owner-occupied and investment home loan offerings.

The lenders announced cuts of up to 140 bps, effective for new home loan applications received from 21 August.

The Bank of Melbourne and St.George slashed rates by between 10 bps and 1.35%, with both banks’ owner-occupied fixed rates now starting from 2.94% and investment fixed rates starting from 3.64%.

Meanwhile, BankSA has cut rates by between 10 bps and 1.4%, with its owner-occupied fixed rates now starting from 2.99% and its investment fixed rates starting from 3.69%.

According to Canstar’s finance analyst, Steve Mickenbecker, the cuts have come in response to a decline in wholesale funding costs.

“The fall in bond rates has reduced longer-term funding costs for lenders, and the Westpac subsidiaries have been able to pass this on to borrowers,” he says.

Also reflecting on the changes, RateCity research director Sally Tindall noted the shift in the mortgage market over the past few months and expects the wave of fixed rate cuts to continue.

“The idea of fixing your rate under 3 per cent until August 2024 is a foreign concept to a lot of Australian mortgage-holders,” she says. “While these low fixed rates may seem like sensational deals, we’re likely to see more cuts.”

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