Days before the Reserve Bank of Australia (RBA) releases its monetary policy decision for July, Bank of Queensland (BoQ) and Virgin Money have decided to match the lowest rate in the market, cutting their three-year fixed rate to 2.99%.
BoQ announced that owner-occupiers taking a three-year fixed-rate home loan would be able to enjoy the 2.99% rate on a principal-and-interest rate basis, provided that they have at least a 20% deposit. The rate is available for loan amounts over $300,000.
Borrowers could make up to $5,000 in extra repayments annually for free to help them settle their loans faster. They could also avail of the split-loan option.
Virgin Money is offering the same rate to borrowers applying for a three-year fixed rate. Borrowers would be able to earn Velocity points over the life of their home loan.
In terms of making extra repayments, Virgin Money allows borrowers to make top-ups of up to $10,000 for free. Virgin Money's home-loan deal does not include application, valuation, and legal fees. Borrowers would also need to pay for $10 service fee monthly.
"We want to help more Australians achieve their financial goals, whether that's buying into the property market for the first time or expanding an existing portfolio," said Johnny Lockwood, Virgin Money's general manager for lending, cards, and deposit.
Last month, UBank slashed the fixed rate of its UHomeLoan products by up to 60%. Its one-year fixed-rate product now bears an interest rate of 2.99%. It followed community-owned Greater Bank's earlier decision to lower its fixed rate by 50 basis points to 2.99%.
The competition amongst lenders is expected to heat up even more given the latest market developments such as the decision of the RBA last month to cut the official rates for the first time in over two years and APRA's proposal of easing lending rules, market watcher Duncan Hughes said in a previous Your Mortgage report.
"Smaller lenders are slicing up to 50 basis points off popular three-year term rates in response to recent cuts by the majors and the likelihood of increased competition if cash rates are cut," Hughes said.
Consumer advocates and experts are also encouraging Australian borrowers to speak with their lenders to find out if they are eligible for the recent rate cuts being advertised in the media.