Since the last time the Reserve Bank cut its interest rates back in April 2009, the home loan market has seen a predictable and steady shift upward in rates, save for the odd excessive rate hike. In what is one of the more dramatic and interesting days in recent memory, both CUA and AMP have announced cuts of 0.25% and 0.22% respectively to their flagship variable rate home loans. It is indeed a welcome news day for consumers, with competition now firmly back on the agenda in the marketplace.
CUA has laid its cards on the table, declaring that they are actively looking to “exploit the perceived absence of competition in the banking industry”. Only time will tell as to the sustainability of the competition-fuelling strategy CUA is looking to push. Indeed, this a sharp contrast to the news of yesterday, where comments out of Westpac suggested that pressures on lenders were only increasing and bigger rate rises loomed. CUA’s new standard variable rate loan at 6.37% is now a full half a percent below the average Big 4 rate, while AMP’s basic variable rate is at an even better 6.27%. AMP’s is advertised as limited time offer, so perhaps they’re waiting to gauge the reaction of both consumers and competitors.
So will competition and rate cuts be the ‘new black’? One thing is for sure, the once stagnant home loan market has been given the shake up it so sorely needed. With interesting times ahead, now is a great time to reevaluate your loan and examine the marketplace. Stay tuned and watch this space, because the home loan battle lines are only just being drawn.
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