slashed rates.jpegIn the market for a new home or considering refinancing? Auswide Bank just dropped the interest rates offered to owner-occupiers signing onto its Basic Home Loan product.

The 'no fuss' mortgage offering now promises an interest rate of 5.99% p.a. for borrowers with loan-to-value ratios (LVRs) of 70% or less (6.02% p.a. comparison rate*).

Previously, if you had an LVR of 60% of less, you might have qualified for a 6.09% p.a. interest rate on the product (6.12% p.a. comparison rate*) .

Meanwhile, if you had an LVR of 60% to 70%, you might have secured a rate of 6.14% p.a. (6.22% p.a. comparison rate*).

Here's a breakdown of the changes:

Lender

Product

LVR

Change

New Rate (p.a.)

Comparison Rate* (p.a.)

Auswide Bank

Basic Home Loan

≤60%

-10bp

5.99%

6.02%

Auswide Bank

Basic Home Loan

60-70%

-15bp

5.99%

6.02%

The Basic Home Loan doesn't demand any monthly or annual fees and comes with a redraw facility, but a borrower turning to the product can't fix their rate or hold an offset account.

"With a goal of continued growth and helping Australians own their own homes, we have released this rate to the market to attract new customers," Auswide Bank chief customer officer Damian Hearne told Your Mortgage.

"We believe these rates will be attractive to new customers looking to purchase a new home or those wanting to refinance their home loan to get a better deal."

The difference between a rate of 6.14% p.a. and a rate of 5.99% p.a. could amount to hundreds of dollars a year for a typical mortgage holder.

For example, a person with a $600,000, 30-year home loan would end up paying nearly $700 less each year if they were to secure such an interest rate cut:

Home Loan Starting Balance

Interest Rate (p.a.)

Monthly Repayments

Total Interest Paid Over 30 Years

$600,000

5.99%

$3,593

$693,641

$600,000

6.09%

$3,632

$707,554

$600,000

6.14%

$3,651

$714,535

"With the cost-of-living pressures we have seen over the past few years, we understand that people are looking for ways to contain their expenses," Mr Hearne said.

"Home loan repayments are often one of the biggest expenses in the household budget."

Auswide Bank has joined the ranks of alternative lenders offering variable mortgage interest rates below 6% p.a.

For reference, the typical interest rate on a new owner-occupier home loan was 6.30% p.a. in April, according to Reserve Bank of Australia (RBA) figures.

23% of Auswide Bank borrowers gear up to roll off fixed rates

Typically, a lender will drop the rates they offer borrowers when they wish to bolster their home lending book by securing a greater share of the home buying and refinancing market.

Auswide Bank labelled current competition between lenders "significant" in an update provided to shareholders in May.

It said its home loan portfolio grew by 2% between June 2023 and May 2024, with customers rolling off fixed rates likely to help support its bottom line in financial year 2024-25.

Nearly a quarter of Auswide Bank's home loan portfolio is expected to roll off fixed rates and face a higher variable rate market - an occurrence known as the 'fixed rate cliff'.

Many of those might be drawn in by the bank's newly dropped Basic Home Loan interest rate.

Other lenders advertising variable rates under 6% p.a.

Auswide Bank is far from the only lender promising variable interest rates lower than 6.00% p.a. in June. 

Right now, G&C Mutual Bank's Essential Workers Home Loan promises a rate of 5.80% p.a. to those working in emergency services and healthcare.

Meanwhile, Tiimely Home (formerly tick:tic) offers a 5.94% p.a. variable rate to borrowers with an LVR as high as 90% and the CommBank-built unloan advertises a 5.99% p.a. variable rate.


The table below features a selection of the most competitive home loans on offer right now:

Advertisement

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
$2,408
Principal & Interest
Variable
$0
$530
70%
Online ExclusiveUp to $4k cashback
5.99% p.a.
5.90% p.a.
$2,396
Principal & Interest
Variable
$0
$0
80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
6.14% p.a.
6.16% p.a.
$2,434
Principal & Interest
Variable
$0
$250
60%
  • Find out your loan eligibility in 2 minutes or less
  • Complete your application in less than 20 minutes
  • Low fees and fast approval times
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of .


Auswide Bank's rate cut comes despite the RBA board choosing to keep rates steady this month.

The board came together for its two-day meeting this week, announcing its decision to hold the cash rate at its 12-year high of 4.35% on Tuesday afternoon.

The cash rate influences the interest rates lenders charge, as it impacts the costs they themselves bear.


Image by Daniel Lincoln on Unsplash