Greater Bank has introduced a new market-low 1.59 per cent interest rate as the battle for homeowners’ wallets heats up.
The Newcastle-based smaller lender will cut its 1- and 2-year fixed rates for borrowers paying principal and interest to 1.59 per cent. That reflects a 0.10 per cent cut for the 1-year rate and a 0.20 per cent cut for its 2-year rate.
The rates will revert to 2.19 per cent after the 1- and 2-year periods.
It’s also reducing rates for interest only borrowers, taking the 1- and 2-year rates down to 1.69 per cent.
However, the new rates are only available to borrowers in NSW, Queensland and ACT.
NAB hikes while Greater Bank lowers: Changing rates landscape
“Governor Lowe’s insistence the cash rate will not rise until at least 2024 has given lenders the assurance they need to keep their short-term fixed rates ultra-competitive,” Tindall said.
“Last month St George and Bank of Melbourne put pressure on the low-cost lenders by cutting their 2-year fixed rates down to just 1.79 per cent, previously the lowest rate in this category.
“Today Greater has knocked this out of the park with its new 1.59 per cent rate.”
Tindall also noted that the 2.19 per cent revert rate is also competitive compared to other banks’ revert rate.
Switching could save $399 a month
According to Canstar analysis, switching from the average variable rate of 3.14 per cent to Greater Bank’s 1.59 per cent 2-year fixed rate would see someone paying principal and interest on a $500,000 loan save $399 per month.
“There is no good reason for borrowers to sit on their hands when rates have dipped this low, and we’re seeing record numbers of refinancers taking advantage of the low rate market,” Canstar finance expert Steve Mickenbecker said.
“Locking repayments in for one or two years now looks like a low risk option, and should allow borrowers another bite of the fixed rate cherry when their terms expire in 2022 or 2023, comfortably inside the Reserve Bank’s timetable.”
He said banks are moving shorter term rates down and longer term rates up to align with the RBA’s anticipated timeline.
However, RateCity’s Tindall warned borrowers to always do their research before jumping in. The bank is offering the rate for borrowers with a maximum loan-to-value ratio of 80 per cent.
“This might be the lowest mortgage rate in Australia’s history, but before you jump in, make sure it suits your finances,” she said.