Just in case you missed it, one of our leading banks has just slashed mortgage interest rates.

That’s correct, you heard it right. Even though the Reserve Bank has raised interest rates seven times this year and most variable mortgage rates are up over 6%, our biggest bank the CBA has just cut rates for its Wealth Package.

A sizeable 2.03% has been cut off the previously advertised offset rate of 6.5% down to 4.57%, but you have to be an owner occupier and pay principal and interest to get the lower rate.

The other condition is that you need to have a minimum of 40% equity in your home, or have 40% of the deposit if you are about to buy.

While the CBA is getting lots of publicity for dropping its mortgage rates at a time when most rates are going the other way, a look around the market puts this in a different context.

Yes, the standard variable rates offered by most banks mostly above 6% at the moment, but offers can still be found at the new rate the CBA is offering.

At the NAB, for example, the Base Variable Rate Home Loan is at 6.2%, but if you are a new customer paying principal and interest you will pay 4.74%. The NAB loan is also a bit more generous because it is available to borrowers with a lower 20% deposit against the total house price.

A look around all the comparison sites will tell you that a slew or other mortgage providers are advertising rates under 5%. Have a google and you’ll see those rates at Bendigo Bank, Suncorp, Ubank and ING, among others.

What the CBA move is telling you, apart from the fact that they are smart marketers, is that the mortgage market is incredibly competitive and the banks want your business even though rates are climbing and house prices are coming down.

It might be true that the CBA is offering the cheapest advertised rate out of the Big Four for home loans with an offset account, but the devil is always in the detail with home loans.

Your rate will vary depending on the size of your deposit, the size of the mortgage, if you choose an offset account and if you are new customer. 

The best advice with mortgages is always to shop around, and fortunately there are excellent comparison websites out there which can help you do that. 

Mortgage brokers can also be useful, and they are now obliged to tell you if they have a conflict of interest such as a relationship with a particular provider.

The CBA move also shows that even though the market may be off its peak there is always a mortgage war out there among providers.

This means that you can always talk to your bank if you don’t like your mortgage rate, threaten to go elsewhere, and see what they say.

If they can cut rates just by pushing out a press release, then they can do it for loyal customers. 

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