HSBC and Westpac decrease mortgage rates

This week, significant shifts have occurred in the Australian home loan market, with HSBC grabbing attention by lowering its fixed mortgage rates to a new record low. Here’s an in-depth look at the latest developments in the mortgage market and what they could mean for you.

HSBC’s New Rates

HSBC has introduced new fixed mortgage rates that are currently among the most competitive in the market. The bank has reduced its fixed mortgage rates to 5.59% per annum (p.a.) for many borrowers, positioning HSBC as a strong contender in the home loan space.

To put it into context, this 5.59% p.a. rate applies to fixed, packaged home loan products for owner-occupiers with a Loan-to-Value Ratio (LVR) of 80% or less. This means that if you're planning to purchase a home and your deposit covers at least 20% of the property's value, you could be eligible for this rate.

It's worth noting that HSBC’s package comes with a $390 annual fee. However, this fee is accompanied by benefits like lower interest rates and waived fees for establishment, valuation, and settlement, which could balance out the cost over time.

While HSBC is reducing rates on its fixed products, there’s a slight increase in its variable home loan rates. The bank has raised the discounted variable interest rate on its Smart Home mortgage product by up to 10 basis points, with the lowest advertised rate now at 6.29% p.a. (comparison rate of 6.65% p.a.), available to owner-occupiers with a 20% deposit who are making principal and interest repayments.

Rate Cuts from Westpac and Its Subsidiaries

In addition to HSBC’s changes, Westpac and its subsidiary banks have also lowered their fixed home loan rates. This includes St George, BankSA, and Bank of Melbourne, all part of the Westpac Group.

These reductions were somewhat expected, as Westpac had previously cut its fixed rates. The new rates, available through the banks’ Advantage Package, apply to owner-occupiers with Loan-to-Value Ratios (LVRs) of 70% or less. This package offers a 15 basis point discount on standard fixed rates but carries an annual fee of $395.

The fixed rates offered through Westpac’s Advantage Package are competitive and align with the current trend of lower mortgage rates in the market.

Teachers Mutual Bank’s New Variable Rates

Teachers Mutual Bank Limited, which encompasses Teachers Mutual Bank, UniBank, Firefighters Mutual Bank, Health Professionals Bank, and Hiver, has made notable rate adjustments this week. The bank has lowered its lowest variable home loan rate to 6.14% p.a. for the Your Way Basic Home Loan product.

Here are the updated rates for different loan types:

• Owner-Occupiers with LVR ≤ 80%: The new rate for the Your Way Basic Home Loan is 6.14% p.a. (comparison rate of 6.20% p.a.), representing a 10 basis point reduction.
• Owner-Occupiers with LVR > 80%: For loans with an LVR above 80%, the rate is now 6.79% p.a. (comparison rate of 6.86% p.a.), also down by 10 basis points.
• Investors with LVR ≤ 80%: The new rate for investment loans is 6.44% p.a. (comparison rate of 6.50% p.a.), after a 10 basis point decrease.
• Investors with LVR ≤ 80% (Interest-Only Loans): The rate has been reduced to 6.84% p.a. (comparison rate of 6.67% p.a.), reflecting a 10 basis point cut.

Impact of Inflation and Tax Cuts

These changes come at a time when inflation in Australia has shown slight improvement. According to the Australian Bureau of Statistics (ABS), the monthly inflation indicator for the 12 months to July was 3.5% p.a., down from 3.8% in the previous month. Although this remains above the Reserve Bank of Australia's (RBA) target range of 2% to 3%, it suggests that inflation is gradually easing.

Experts are optimistic that this could lead to a cash rate cut by the RBA in the near future, potentially offering relief to mortgage holders. Many anticipate that borrowers could see a reduction in the cash rate early next year, which might further lower mortgage rates.

Additionally, the implementation of stage three tax cuts seems to have provided financial relief to many Australians. This coincided with a decline in mortgage stress, according to recent figures from Roy Morgan. The combination of tax cuts and lower inflation may help ease the financial burden on homeowners.

What This Means for You

If you currently have a mortgage or are planning to enter the property market, these recent rate changes could work in your favor. For those thinking about refinancing, HSBC’s new fixed rates may offer substantial savings compared to previous rates. Likewise, the reduced rates from Westpac’s subsidiaries and Teachers Mutual Bank could be attractive options if you’re looking for a competitive home loan.

When assessing mortgage options, it's important to consider not only the interest rates but also the fees and terms associated with each loan. For instance, HSBC’s $390 annual package fee should be balanced against the benefits of lower interest rates and waived fees.

These latest mortgage rate adjustments highlight the competitive nature of the market and present opportunities for borrowers to secure better terms. As always, it's wise to compare various loan products and consult with a mortgage advisor to find the best fit for your financial needs.

Need Help with Your Home Loan?

With mortgage rates fluctuating, securing the best deal can be challenging. At ASK Financials, we're here to simplify the process. Our team is ready to help you navigate your options and find the best rate tailored to your needs.

Contact ASK Financials today for expert guidance and discover how you can take advantage of these new rates. We're committed to helping you find the right home loan for your situation.

Call us at: 0433 944 055

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