Election promises roll out & major banks slash home loan rates

Tax deductible mortgage repayments, 5% deposits across the board, and 100,000 dedicated dwellings. That's what's being promised to first home buyers in the lead-up to the 3 May election. 

Let's break them down in the order they're listed above.

The tax deduction policy is being offered by the Coalition.

It plans to allow those entering the property market for the first time by buying or building a new home to deduct their interest costs on up to $650,000 of a home loan from their taxable income.

The change could save a typical homeowner more than $10,000 a year.

Labor promises to scrap income caps and increase property price caps on the Home Guarantee Scheme – and remove the limit on places (the Coalition says it will bump the income caps and expand price caps too).

In addition, Labor has pledged to invest $10 billion to partner with developers and build 100,000 homes reserved exclusively for first home buyers, in a model similar to that already operating in South Australia.

It will also bolster income and price caps on the yet-to-launch Help to Buy shared equity scheme.

But, as I told Your Mortgage newsletter subscribers on Wednesday, politicians' promises likely matter little when compared to lenders' actions.

Whether you're refinancing, buying your first home, or simply reviewing your current deal, this week's changes might open up new opportunities to save.

CommBank's Bankwest unveils market-leading fixed rate

CommBank-owned Western Australian institution Bankwest has emerged as a market frontrunner, dropping its fixed home loan rates to as low as 5.29% p.a. on two-year fixed terms.

That puts it in line with rates offered by Australian Mutual Bank on a three-year fixed term. Plus, Bankwest's option to open 40% offset accounts (meaning 40% of the account's balance offsets the loan's principal balance) could prove attractive.

Bankwest offers two fixed rate products with identical headline rates but differing comparison rates:

• A basic fixed rate loan, costing $12 per month
• A packaged fixed rate loan, which includes a fee-free credit card for a $395 annual fee

The following rate changes apply to Bankwest's Complete Home Loan package for owner-occupiers making principal and interest repayments:

Fixed period	LVR	Change	New rate	Comp rate*
One year	≤80%	-60bp	5.59%	7.01%
	80-90%	-55bp	5.89%	7.04%
	90-95%	-50bp	6.29%	7.21%
	95-98%	-40bp	7.09%	8.73%
Two years	≤80%	-60bp	5.29%	6.84%
	80-90%	-65bp	5.59%	6.90%
	90-95%	-50bp	5.99%	7.09%
	95-98%	-40bp	6.79%	8.52%
Three years	≤80%	-30bp	5.59%	6.80%
	80-90%	-35bp	5.89%	6.88%
	90-95%	-20bp	6.29%	7.10%
	95-98%	-10bp	7.09%	8.45%
Four years	≤80%	-30bp	5.69%	6.74%
	80-90%	-35bp	5.99%	6.85%
	90-95%	-20bp	6.39%	7.09%
	95-98%	-10bp	7.19%	8.37%
Five years	≤80%	-20bp	5.79%	6.71%
	80-90%	-25bp	6.09%	6.84%
	90-95%	-10bp	6.49%	7.10%
	95-98%	-10bp	7.19%	8.27%

Westpac & stable drop offset home loan rates by over 1%

Westpac and its subsidiaries – St George, Bank of Melbourne, and BankSA – also made big moves this week, cutting rates on variable offset home loans by up to 1.4%.

The cuts apply to Westpac's Premier Advantage Rocket Home Loan, which includes an offset account and carries a $395 annual fee.

New rates in the lineup now start at 6.14% p.a., placing Westpac mid-pack among the big four when it comes to offset loan offerings.

Check out our previous coverage on Westpac's move to learn more.

Bendigo Bank varies Home Loans by up to 0.30% - down fixed up variable

Another big player in the mortgage market, Bendigo Bank, has trimmed fixed rates by up to 30 basis points, while lifting variable rates by 5 basis points.

• Express variable home loans now start at 5.89% p.a. (comparison rate 6.02% p.a.)
• Complete home loan variable rates begin at 5.94% p.a. (comparison rate 6.16% p.a.)

Rates on its Express fixed line up for owner-occupiers making principal and interest repayments are now as follows:

Fixed period	Change	New rate	Comp rate*
One year	-5bp	5.99%	6.03%
Two years	-5bp	5.69%	5.98%
Three years	-15bp	5.89%	6.02%
Four years	-5bp	5.99%	6.06%
Five years	-5bp	5.99%	6.06%

But the moves didn't stop with Bendigo Bank.

Partner bank Adelaide Bank also upped its variable interest rates by five basis points on its Smartfit and SmartSaver products, which now start at 6.04% p.a.

Meanwhile, Bendigo Bank-backed Tiimely Home lifted rates on its variable mortgage product five basis points to start from 5.79% p.a.

Bank of Queensland cuts special offer variable rates

Finally, big brand bank BoQ dropped the special offer rates currently advertised on its Clear Path home loan this week.

Variable rates on the product now start from 5.89% p.a. for new-to-bank borrowers taking out home loans worth at least $150,000, with changes including:

Borrower/interest type	LVR	Change	New rate	Comp rate*
Owner-occupier, P&I	≤80%	-10bp	5.89%	6.02%
Owner-occupier, P&I	80-90%	-10bp	6.14%	6.26%
Investor, P&I	≤80%	-20bp	6.04%	6.16%
Investor, P&I	80-90%	-20bp	6.34%	6.00%
Investor, IO	≤80%	-20bp	6.14%	6.21%
Investor, IO	80-90%	-25bp	6.54%	6.38%

Other movers

In the meantime, a number of other lenders made notable home loan rate movements, such as:

• Beyond Bank dropped fixed rates by up to 20 basis points
• Bank First also lowered fixed rates by as much as 46 basis points
• The Mac cut select fixed rates by up to 70 basis points

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