Over 50 lenders to pass rate cut in full
More than 50 lenders, including the “big four”, have announced plans to cut variable home loan rates by 0.25 percentage points following the Reserve Bank of Australia’s cash rate decision.
Over 50 Australian lenders have fully endorsed the RBA cash rate decision, with the lowest advertised variable rate set to be 5.64 per cent once it takes effect in the coming weeks.
For the first time since 2020, the RBA has cut Australia’s cash rate by 0.25 percentage points from 4.35 to 4.10 per cent, bringing relief to borrowers.
Following the announcement, more than 50 lenders, including Australia’s four major banks – CBA, Westpac, NAB and ANZ – announced they would fully pass the 0.25-percentage-point cut in the coming weeks.
Canstar data insights director, Sally Tindall, said the number of lenders who came forward with upcoming reduced variable rates was “incredible”.
“Borrowers across the country will hopefully be able to sleep slightly easier tonight, knowing that mortgage relief is finally here,” Tindall said.
The new lowest advertised variable rate is set to be 5.64 per cent from Australian Mutual Bank, Homestar Finance and RACQ once in effect.
Out of the big four, ANZ will offer the lowest variable rate at 5.84 per cent, followed by CBA at 5.90 per cent, while NAB and Westpac’s new variable rate will be at 6.19 per cent.
CBA, NAB and ANZ’s home loan rate cuts will come into effect on 28 February, while Westpac’s home loan changes will start on 4 March.
Tindall said the big four have “put pressure” on other lenders by passing the 0.25-percentage-point cut.
“One 0.25-percentage-point rate reduction pales in comparison to the mountain of rate hikes borrowers have been pummelled with in the last few years,” Tindall said.
“However, this first cut represents more than dollars back into the budget. It suggests that the worst of the cost-of-living crisis could now be behind us.”
Data showed that over 35 lenders are forecast to offer at least one variable rate under 5.75 per cent, while more than 60 lenders will have at least one variable rate under 6 per cent.
Additionally, the new estimated average variable rate for owner-occupiers would sit at 6.07 per cent.
Moneywise, a 0.25-percentage-point rate reduction represents a monthly drop of $92 for owner-occupiers with a $600,000 debt and 25 years remaining.
Tindall said that while the small cut would represent a “lifeline” for some households, borrowers who could maintain the same repayment would win in the long term.
Data showed that borrowers with a $600,000 debt and 25 years remaining could save nearly $90,000 in interest and four years over the life of their loans if they kept the same repayment.
“If you can grit your teeth and tip any savings into your home loan, you’ll thank yourself down the track,” she said.
Additionally, Tindall said borrowers could haggle and refinance their loans with another lender who offers more competitive rates.
While RBA governor Michele Bullock warned borrowers not to be too hopeful about multiple rate cuts, another four additional cuts could happen in 2025.
“Yes, switching can be a bit of paperwork, and there are switch fees involved,” she said.
“However, if you’ve left your mortgage by the wayside over the last few years, refinancing to one of the lowest rate lenders could potentially see you secure three or four rate cuts rather than just one,” Tindall concluded.