Nila Sweeney

AMP announced its reducing interest rate on its basic variable home loan for new customers by 0.10% to 6.24% thanks to the recovery in securitisation markets.

Australia's treasurer Wayne Swan noted in his website that he was informed of the decision last week by AMP managing director and chief executive Craig Dunn.

"Last week we received some welcome news with AMP announcing that it is reducing its basic variable home loan interest rate for new loans by 10 basis points, attributing the cut to the Government's investment in the Australian RMBS market. AMP's rate decision is good news for family budgets, and means more competitive pressure on the big banks. It was also encouraging to read Mr Dunn's statement that "we are also hopeful that we will be further able to reduce our rates in the coming months, as we gear up our operations in light of ongoing improvements in the securitisation market."

The federal government has invested up to $16 billion in Australian residential mortgage-backed securities (RMBS) in a bid to support competition in Australia's mortgage market and enabling smaller lenders to lend at competitive interest rates and maintain a higher level of lending.

AMP's basic variable loans come with 100% offset accounts which enable customers to save on interest costs by parking all their income in the linked account.

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