UBank reveals they are dropping variable rate loan deals

A SUBSIDIARY of one of Australia’s biggest banks has announced it is bucking the industry trend and dropping interest rates for new customers.

EXCLUSIVE

AN OFFSHOOT of one of the biggest banks has revealed it is bucking the trend and dropping interest rates.

National Australia Bank’s subsidiary bank UBank today revealed it has lowered interest rates on its variable rate loans by up to 10 basis points.

This could save customers thousands of dollars over the life of the loan.

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The online-only bank already offers some of the cheapest deals on the market and is going against the tide of many other lenders who have recently hiked interest rates.

This includes AMP, Bendigo Bank, Bank of Queensland, ING, Suncorp, Bank of Queensland and Pepper.

The Big Four banks have yet to move interest rates on home loans.

UBank has revealed for new owner occupier customers paying principal and interest with loans of between $200,000 and $700,000, they have reduced their variable interest rate from 3.69 per cent to 3.59 per cent.

And for new borrowers with loans more than $700,000 the variable rate is dropping from 3.62 per cent to 3.59 per cent.

The reductions do not apply to existing customers.

Calculations from financial comparison website RateCity show for customers on a $300,000 30-year loan they would save $6100 over the life of the loan on the new rates.

While for borrowers with a $700,000 loan they would save $4300.

RateCity spokeswoman Sally Tindall said it was great to “see a lender buck the trend and move rates.”

RateCity’s spokeswoman Sally Tindall said all eyes are on the Big Four lenders to see whether they will drop interest rates.

“Here we have a subsidiary of a Big Four bank, upping the ante in the low rate market at a time when the nation anxiously waits for their parent company to hike,’’ she said.

“It is a clear indication the low cost home loan market is the new battleground for lenders.”

The new rates start from today.

Speculation continues on whether the Big Four banks will move on interest rates as wholesale funding pressures increase.
Home Loan Experts’ managing director Otto Dargan said he doesn’t believe the major banks will drop interest rates anytime soon.

“If anything their cost of funds has increased and there is pressure for them to put up interest rates,’’ he said.

“Overall most lenders are putting up interest rates although several lenders still have sharp discounts especially with fixed rate loans.”

Lee Hatton, the CEO of UBank. Picture: James Croucher

It has put the big banks under the spotlight for all the wrong reasons including fee for no service, incorrectly charging customers and not accurately accessing customers’ individual financial situations.

@sophieelsworth