Final four-year fixed home loan rate under 2 per cent is hiked, as variable rates drop

BankVic has raised Australia’s last ultra-low four-year fixed home loan rate under 2pc, as lenders cut variable rates amid a lending boom.

Lenders are rushing to cut variable rates amid a lending boom.

Australia’s last ultra-low four-year fixed home loan rate under 2 per cent has been lifted by BankVic, as lenders rush to cut variable rates amid lending boom.

The member-owned mutual bank, founded as the Police Association Credit Co Operative in 1974, on Tuesday increased its four-year fixed home loan rate to 2.29 per cent, from 1.95 per cent.

At the start of 2021 there were 32 four-year fixed rates under 2 per cent, including from three of the big four banks: Commonwealth Bank, Westpac and National Australia Bank, according to comparison website RateCitycom.au.

BankVic’s move comes after 30 lenders have cut at least one variable rate over the last two months. It is understood that banking giant HSBC was planning to cut its variable rate on Tuesday, but is now holding off for a few weeks.

Reduce Home Loan boasts the lowest variable rate of 1.77 per cent in the market, which is a record low. BCU has the lowest one and two-year fixed rates of 1.67 per cent and 1.78 per cent, respectively.

RateCity.com.au research director Sally Tindall says home lending is going through the roof and banks need to stay competitive if they want a slice of the pie.

“While four and five-year rates have been on the rise, many banks are still trimming down their variable rates in order to attract new business, particularly on rates where there’s a bit of fat to cut,” Ms Tindall said.

“While the proportion of people opting to fix their loan has hit record highs, when you look at the books of the big four banks, the majority of lending is still variable.”

However, the big catch with variable rate cuts is that they generally apply to only new customers, according to Tindall, The exception is Athena, which offers all customers the same variable rate.

“If you’re on a variable rate, use this market competition to your advantage by haggling for a rate reduction with your current bank or refinancing to a lender who is willing to offer you a better deal,” she says.

Financial comparison site Mozo says “the knives are out and busy slashing variable rates for home loans” as lenders increase longer-term fixed rates.

RateCity research director Sally Tindall. Picture: Supplied.

Athena, Auswide Bank, Bendigo Bank, Homestar, Macquarie Bank and Tic:Toc have all cut variable rates, while Commonwealth Bank, ING and NAB have lifted their fixed rates, according to Mozo’s latest banking roundup report.

Over the past two months, 27 lenders have cut their two-year fixed rate, while 15 organisations have dropped their three-year fixed rate.

There are 189 mortgage rates under 2 per cent, an increase of 57 since the start of the year and the highest number on record on RateCity.com.au’s database.

The Reserve Bank of Australia has committed to keep the official cash rate on hold until at least 2024.

Originally published as Final four-year fixed home loan rate under 2 per cent is hiked, as variable rates drop