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Home loan ‘opportunity’ gives instant interest rate cut and $3,299 savings

Mortgage holders could save up to $296 per month on their repayments by switching to their bank’s subsidiary brand.

The majority of Aussies have their home loan with one of the Big Four banks but a simple switch could see them score big savings. The kicker? These savings are just “a step removed” from their current lender.

Commonwealth Bank, Westpac, NAB and ANZ customers are paying a premium of up to 0.75 percentage points, compared to customers who bank with their subsidiary and digital brands, new Canstar research found.

For example, CBA’s lowest owner-occupied variable rate is currently 6.49 per cent. However, by going with its subsidiary Unloan, you can get a rate of 5.99 per cent.

Image of Australian money and homes. Home loan and mortgage savings concept.
Borrowers can reduce their home loan repayments by switching to a subsidiary brand. (Source: Getty)

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Westpac currently offers a 6.44 per cent introductory rate to owner-occupiers. This jumps to 6.84 per cent after two years, which is the same as the lowest rate offered by NAB.


Customers could get savings by going with Westpac’s sub-brand RAMS, which offers a rate of 6.09 per cent, or NAB subsidiary ubank, which has a rate of 6.14 per cent.

ANZ’s lowest variable rate is currently 6.54 per cent, but the bank has recently launched its first digital loan through ANZ Plus with a 6.14 per cent rate for borrowers refinancing in metro New South Wales and Victoria.


With economists and experts forecasting the Reserve Bank (RBA) won’t cut interest rates until later this year - or potentially 2025 - this switch could give mortgage holders an instant interest rate cut.

Big banks ‘undercutting themselves’

Given 73 per cent of the value of owner-occupier loans are with the Big Four banks, Canstar finance expert Steve Mickenbecker said making the switch “a step removed from the parent company” could have a massive impact on borrowers’ pockets and the market.

“The big banks are undercutting themselves through their lower-cost digital home loan offers rather than fall behind in the race for new lending,” Mickenbecker said.

“They are preserving margin in the main brand, where the majority of loans remain, and staying relevant with the cost-conscious end of the market with their subsidiary brands’ offers.

“This has led to a fascinating paradox with the major banks cannibalising their margin on new lending through their subsidiary brands to gobble up their competitors’ lunch. It makes so much sense for the banks and opens up an opportunity for borrowers.”

$3,229 per year in savings on offer

By switching a $600,000 loan from one of the Big Four banks’ lowest rates to its subsidiary, Canstar calculated you could save between $157 and $296 per month in repayments. This works out to savings of up to $3,229 per year.

Mickenbecker recommended borrowers “carefully evaluate” the terms and conditions of the loan they were switching to, including any loan-to-value ratio (LVR) requirements.

“It's essential to consider the long-term implications and make certain the loan offers the features you need to repay the loan sooner,” Mickenbecker said.

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