The Big Four are progressively slashing their mortgage rates in a bid to revive demand in sluggish property markets, boost profits, and squeeze out smaller lenders who’ve been grabbing market share following the lending caps imposed on the biggest banks.
Australia and New Zealand Banking Group (ANZ) and National Australia Bank (NAB) have followed Commonwealth Bank of Australia (CBA) and Westpac by cutting key property rates by up to 50 basis points.
NAB has dropped its five-year fixed rate for owner-occupied, principal-and-interest home loans by 50 basis points, from 4.59% to 4.09%. The bank has also reduced its fixed rates on investor loans by up to 35 basis points, with rates now starting at 4.09%.
Last Friday, ANZ dropped fixed rates on its “interest in advance,” interest-only home loans by up to 40 basis points, with rates beginning at 4.11%. Meanwhile, fixed rates on ANZ’s owner-occupied, principal-and-interest home loans have fallen by 10 basis points, with rates now starting at 3.99%.
The major lenders are aggressively reducing key fixed and investor interest-only rates despite the central bank and prudential regulators’ concerns about record levels of household debt.
The Big Four have ample room for additional interest-only cuts as they have undershot the Australian Prudential Regulation Authority’s 30% cap in new interest-only residential mortgages.
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