Australian Lenders Slash Rates, Fueling Home Loan Market Competition – Money Advice Experts in Services

Australia’s home loan market witnessed a significant wave of rate cuts recently, with 31 lenders reducing 306 owner-occupier and investor variable rates by an average of 0.27%, according to the latest Weekly Rate Wrap-up by Canstar. Additionally, 11 lenders made cuts to 279 fixed rates, with an even more substantial average reduction of 0.85%.

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These rate adjustments followed the Reserve Bank’s decision to lower the official cash rate by 25 basis points to 3.85%, marking the second rate cut of the year. As a result, the average variable rate for owner-occupiers paying principal and interest now stands at 6.4%, with Horizon Bank offering the lowest rate on the market at 5.24% for first-home buyers with a 30% deposit.

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Canstar’s database now shows 1,296 rates below 5.75%, a notable increase from the previous week’s 857 rates. Sally Tindall, Canstar’s insights director, highlighted Horizon Bank’s competitive move, stating that their new rate of 5.24% sets a benchmark for the market, especially for first-home buyers meeting the deposit criteria.

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Tindall also pointed out that fixed rates are rapidly declining, with an increasing number of lenders offering rates below 5%. Despite the prevailing preference for variable loans, Tindall believes that the attractive fixed rates could entice more borrowers to consider locking in their rates.

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Monthly APRA data revealed that Commonwealth Bank (CBA) and Macquarie Bank are leading in loan book growth. CBA, after two rate cuts in a month, saw a 6.2% increase in its residential loan book to $586 billion over the past year, maintaining its dominance among the big four banks. Macquarie Bank, with a 19% growth in its housing loan book, although holding a modest 6% market share among authorized deposit-taking institutions, continues to show strong performance.

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The competitive landscape in Australia’s home loan market is intensifying, with lenders vying to attract borrowers through rate cuts and competitive offerings. As interest rates continue to adjust and market dynamics evolve, borrowers have an opportunity to explore a range of options and potentially secure favorable deals to meet their home financing needs.

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