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New borrowers may be able to take advantage of a 3.29% home loan rate, but six million existing borrowers could reap similar benefits as a domino effect makes its way through the market.
Canstar group executive of financial services Steve Mickenbecker believes an increase in wholesale funding costs is unlikely over the next six months and that this will set the scene for other lenders to reduce home loan rates as competition heats up.
“Existing borrowers have been left out of the recent bout of rate cuts by lenders, with cuts to fixed rates and offers to new customers. But the tide is changing with an RBA cash rate cut imminent that will see the close to six million existing home loan borrowers share in lower repayments,” said Mickenbecker.
His comments follow the launch of a new, market leading home loan rate, funded by Mortgage House and distributed through uno Home Loans. Offered at 3.29% variable (3.34% comparison) the rate was announced in anticipation of an RBA rate cut “in the next two months”.
“The [Mortgage House] rate is positioned as an early bird, getting in ahead of the Reserve Bank curve and taking the suspense out of the timing. There won't be double dipping when the RBA makes its anticipated cut,” Mickenbecker added.
The new loan is available for prime vanilla owner occupiers on PAYG, with 80% LVR or lower. The loan is P&I only and applicants must have a clear credit history, a CAT 1 location and a maximum requirement of $1m per borrower. The fees applicable are exactly as per Mortgage House Prime and the offer is only valid for deals submitted prior to 30 June 2019.
In what Mortgage House CEO Ken Sayer called the “unlikely event” of a rate hold or rise, the early bird rate will remain in place for the period of the offer.
According to the latest Canstar weekly rate summary, the average variable rate for an owner occupier P&I loan stood at 4.33% before the Mortgage House launch.
“Unless wholesale funding costs increase over the next six months, which on today's indications looks unlikely, you would have to expect the lower priced end of the market is being led down again. The point will have to come where we hit a floor, but 10 years ago who would have thought it would be well below 3.5% ... even two years ago,” Mickenbecker said.
