CitiBank hikes home loan rates after no movement from the RBA

Polly Fleeting

Thursday 05 December 2019

While it isn’t one of the big four, CitiBank is still a prominent player in the Australian financial game, however, it seems that they’ve changed their tactics.

While it isn’t one of the big four, CitiBank is still a prominent player in the Australian financial game, however, it seems that they’ve changed their tactics.

Yesterday, CitiBank bumped up its home loan rates, yes that’s right bumped up not down. 

The bank has shifted rates for both owner occupiers and investors, up to 25 basis points, across both its variable and fixed rate mortgage products. 

Citi claims that the change has come as an attempt to prioritise existing applications and ultimately improve processing times. 

Mozo’s Banking Expert, Peter Marshall says that the reality behind the rate changes  made by CitiBank is to increase the bank’s bottom line. 

“There could be an element of trying to slow down the number of assessment requests they are getting,” he said.  

“To some extent it’s a logical thing to do to try and slow down the number of pre-approval requests you’re getting, especially if you are getting a lot of broker traffic where you could be doing a lot of work that ends up going nowhere. So there definitely could be an argument to say that what they are doing is just to manage the levels of customer service they want to be able to commit to.”

RELATED ARTICLE: December RBA meeting: Interest rates remain 0.75% 

On Tuesday, the RBA decided to leave the current 0.75% official cash rate unchanged, however, over the course of 2019 they made cuts on three occasions - in June, July and October - and experts predict another cut sometime in the New Year. 

And CitiBank appeared to be following suit, well, sort of. They started off with a bang when in June they slashed their Standard Variable Rate by 0.25%, then in July they dropped again by 0.18% and then finally by 0.15% in October. 

However, Citi’s rates have been propped back up again, so here’s a rundown of all the changes CitiBank made for both owner occupiers and investors making principal and interest repayments this week: 

ProductOwner OccupierChange InvestorChange
Basic Variable3.06%+0.10%3.29%Nil
Standard Variable3.19%+0.23%3.39%+0.10%
Offset Variable3.19%+0.23%3.39%+0.10%
1 Year Fixed2.89%+0.15%3.09%+0.10%
2 Year Fixed2.89%+0.15%3.09%+0.10%
3 Year Fixed2.89%+0.15%3.09%+0.10%
5 Year Fixed2.99%+0.25%3.19%+0.20%

For investors making interest-only repayments CitiBank’s Standard Variable Rate as well as the Offset Variable Rate spiked by 0.20% and the 5 year fixed rate also jumped up by 0.10%. 

Despite the changes, CitiBank’s fixed and variable rates are still competitive when compared to other lenders on Mozo’s database. 

“These rate increases says to me that Citi aren’t that keen on getting new business and that their appetite is, for whatever reason, lower,” Marshall said.

“I don’t think that they’ll be dropping rates again anytime soon.” 

RELATED ARTICLE: 'Liar loans' on the rise: 1 in 3 Australian home buyers guilty of fibbing

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