Mozo tips no cut for February, but 50 basis points to drop in 2015

Mozo tips no cut for February, but 50 basis points to drop in 2015
Jessie RichardsonDecember 7, 2020

The director of comparison site Mozo.com.au predicts that variable home loan rates could dip below 4% this year as the Reserve Bank cuts the official cash rate.

Mozo director Kirsty Lamont said: "If lenders choose to pass on these cuts to customers, and I'm betting they will, Australians could see variable home loan rates start with the number three."

According to Lamont, competition among lenders has escalated in the past six months, with the popularity of non-bank lenders intensifying the fight for market share.

"It's an odds on bet that any cuts to the official cash rate will be passed on to home loan customers in 2015, as lenders fight it out over customers," she said.

Lamont is tipping two 25 basis point cuts from the Reserve Bank this year. According to Mozo.com.au, the current lowest variable home loan rate is 4.48%, offered from loans.com.au. If the lender passed on the full 50 basis point rate cut predicted, their variable rate would decrease to 3.98%, the lowest on record.

By Mozo's calculations, if a full 50 basis point cut was passed along, the annual saving on the average outstanding home loan balance of $239,000 would equal $840. If repayments were kept constant, a borrower could pay their loan off two years and two months earlier, with Mozo calculating a total saving of $16,957 in interest.

Other lenders which are currently offering variable home loans rates below 4.6% per annum include the NAB-backed UBank. Its UHomeLoan standard variable rate home loan is currently on offer at a 4.54% rate, with a 0.33% per annum offer cutting the product's usual 4.87% per annum rate.

The Queenslanders Credit Unit is offering a special on its Ultimate Home Loan, with the variable rate at 4.59% per annum. Bankwest are offering the same rate on their Super Start Home Loan, but the rate is variable for three years before climbing to 5.77% per annum.

However, Lamont and Mozo don't think rate cuts are coming quite yet, predicting the official cash rate will stay at its record low of 2.5% for February due to "improving housing data, a cooling housing market and lower oil prices".

 

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