ING has rolled out the cheapest home loan fixed rate on the market
A home loan interest rate war is hotting up with the lowest-ever fixed rate deal hitting the market. Find out how your bank compares.
Money
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Fixed rates have hit their lowest ever levels in Australia.
One of the nation’s biggest lenders, ING, has today rolled out a three-year fixed rate of just 2.49 per cent and is likely to spark an interest rates war in Australia.
This is for new owner occupier customers paying principal and interest.
The rate was previously 2.84 per cent.
The move comes just two days after the Reserve Bank of Australia governor Dr Philip Lowe slashed the cash rate to a record low of 0.5 per cent.
And experts say there could well be another cash rate cut as early as next month which would likely see mortgage rates come down even further.
Financial comparison website RateCity’s spokeswoman Sally Tindall said ING’s latest move would be likely to trigger a war between lenders.
“A fixed rate war is brewing and for once it’s not just the smaller lenders leading the way,” she said.
“While the banks are putting record low fixed rates on the table, I doubt we’ve hit the bottom just yet.
“With one more cash rate cut likely, we could see both fixed and variable rates fall even further, as banks jostle for homeowners’ mortgages.”
ING is a Dutch-owned bank and is one of the largest financial institutions behind the big four banks and entered the Australian market in 1999.
The big four banks three-year owner occupier fixed rates are at least 0.37 percentage points higher, starting at 2.88 per cent.
Smaller lender BankVic also announced fixed rate cuts, offering owner occupier principal and interest borrowers two and three-year fixed deals at 2.5 per cent.
Variable rate deals still remain extremely enticing and the cheapest offers in the market has remained by smaller lenders including Reduce Home Loans and Homestar Finance who are offering just 2.44 per cent.
ING’s head of mortgages Julie-Anne Bosich said their mortgage book has hit $50 billion and they are the fifth biggest home loan lender in the country.
“The new 3 year fixed rate is a record-low offering by ING in Australia and we expect it will encourage many home loan customers to reassess their mortgage options,” she said.
Finsure managing director John Kolenda, who manages companies including 1300HomeLoan said competition was continuing to hot up.
“It’s a sign of intensified competition across both fixed and variable products to try and lure customers in,” he said.
“With the slowdown and the focus on the banks their volumes have swayed and moved across to more non-bank and smaller banks so we are seeing more competition coming from ever corner of the market.
“It’s fantastic for borrowers who have more choice and very attractive rates that provide long-term savings.”
AMP Bank followed in ING’s footsteps and also rolled out a three-year owner occupier principal and interest fixed rate loan at 2.49 per cent.
Homeloanexperts.com.au’s managing director Otto Dargan said he was astonished to see three-year fixed rates this low.
“It’s a big win for borrowers and a clear sign that the money markets are predicting low rates to be around for the medium term,” he said.
“The pressure is now on the major banks to match this.”
AMP chief economist Dr Shane Oliver this week said he expected the RBA board to cut the cash rate again next month which would bring it down to just 0.25 per cent.
THREE-YEAR FIXED RATES
ING 2.49%, monthly repayments $1,184
ANZ 2.88%, $1245
CBA 2.99%, $1263
NAB 2.98%, $1,262
Westpac, 2.88%, $1,245
Source: RateCity.com.au, passed on a $300,000 30-year owner occupier principal and interest loan.
Originally published as ING has rolled out the cheapest home loan fixed rate on the market