Variable home loan rates still being cut for big deposit buyers

ANZ has cut rates on its basic variable home loan by 0.20 per cent. The rate cuts are for new customers with deposits of over 20 per cent. The biggest discount going to borrowers with deposits of 30 per cent or more. The move comes after continued pressure on lenders to cut their lowest variable loans, as competition in the market drives these rates down, despite rising fixed rates. The RateCity.com.au database shows that in the last three months, 65 lenders have cut at least one variable rate. Most cuts have been to lenders’ ‘no frills’ variable loans and for new customers only, it noted. The exception is Athena, which this week cut its lowest variable rates for new and existing customers. "There are now significantly more variable rates under 2 per cent than fixed, with 72 variable rates under 2 per cent and just 42 fixed," RateCity.com.au research director, Sally Tindall, said. "ANZ was trying to chase down its big four bank competitor Westpac. “Fixed rates might be on the rise, but competition in the variable rate market is still alive and kicking,” she said. “For months Westpac has had the lowest variable rate out of the big four. "ANZ has now thrown down the gauntlet in a bid to win new customers, matching Westpac’s lowest variable rate of 2.19 per cent. “Variable rates are following a very different trajectory to fixed rates, at least for now. "There are 72 variable rates under 2 per cent, however, for most borrowers there’s a catch. The vast majority of these variable rate cuts are reserved for new customers, so anyone looking for a rock bottom rate will have to consider switching lenders, or at least haggle with their current bank. “The one notable exception is low-cost lender Athena, which cut its variable rates this week, not just for new customers but for existing ones as well. That’s a rare act in the mortgage market, particularly when there’s been no move to the cash rate for over a year. “We expect variable rates will continue to fall over the next couple of months, however, as we get closer to the next cash rate hike, some lenders could move ahead of the RBA, particularly if the cost of funding continues to soar,” she said.