Home Loan Interest Rates Continue to Drop Despite Market Stagnation

The Australian home loan market saw a few interest rate reductions this week, though activity remained subdued as the year nears its end. With the Reserve Bank of Australia (RBA) unlikely to make any rate adjustments before mid-2025, smaller lenders such as Bank of Sydney and The Mac Credit Union took the spotlight, adjusting variable and fixed home loan rates downward.

Market Movement: Rates Still Trending Lower

While the big four banks remained quiet, smaller players have stepped up:

• Bank of Sydney cut variable rates on its Expect More Home Loan for owner-occupiers and investors with high loan-to-value ratios (LVRs). Borrowers with LVRs above 80% saw reductions of over 100 basis points, with owner-occupier rates dropping to 6.54% p.a. and investor rates to 6.99% p.a.
• The Mac Credit Union trimmed fixed rates for one- and three-year terms, offering a standout rate of 5.99% p.a. for owner-occupiers on a three-year fixed loan with an LVR of up to 95%.

These changes highlight opportunities for borrowers to secure better rates, especially with lenders aiming to attract high-LVR clients.

Inflation Data Leaves RBA Unmoved

The release of October’s monthly inflation figures didn’t shake the market. Headline inflation remained steady at 2.1%, while underlying inflation rose slightly to 3.5%, driven by one-off adjustments in electricity and travel price metrics.

NAB economists now anticipate softer inflation figures for the December quarter, but with forecasts of an interest rate cut pushed back to mid-2025, any immediate relief for borrowers remains unlikely.

Key Rate Adjustments This Week

*Comparison rates are indicative and based on a loan amount of $150,000 over 25 years. Check with your lender for more details.

Here’s a closer look at the latest rate changes:

Bank of Sydney Variable Rate Reductions

• Owner-Occupier (LVR 80-90%): Down to 6.54% p.a. (6.69% p.a. comparison rate*).
• Investor (LVR 80-90%): Down to 6.99% p.a. (7.13% p.a. comparison rate*).

The Mac Fixed Rate Reductions

• 1-Year Fixed Owner-Occupier: Down to 6.29% p.a. (7.81% p.a. comparison rate*).
• 3-Year Fixed Owner-Occupier: Down to 5.99% p.a. (7.42% p.a. comparison rate*).
• 1-Year Fixed Investor: Down to 6.39% p.a. (7.82% p.a. comparison rate*).
• 3-Year Fixed Investor: Down to 6.09% p.a. (7.45% p.a. comparison rate*).

Ready to Explore Your Options?

If you’re considering refinancing or securing a new home loan, now might be the time to act as lenders compete with rate reductions. Vantage Loans can help you compare the latest offers and secure a loan tailored to your financial goals.

Contact us today at 1800 595 500, email [email protected], or visit vantagefinancial.com.au to take advantage of falling rates.