Credit Union Australia and AMP slash home loan rates

Credit Union Australia and AMP Bank have slashed their variable mortgage interest rates in a move that could encourage Australians to compare home loans.

CUA has announced a 25 basis point cut in its variable rate to 6.37 per cent while AMP Bank also recently cut its rates to 6.27 per cent – changes that have put the banks’ home loans well below the interest rates offered by the big four banks, Smart Company reported.

Announcing the cuts, CUA chief executive Chris Whitehead said: "We agree with the Treasury Secretary that the banking sector has become more concentrated over the last few years. There is a crying need for more competition and we are taking an active step in driving that competition."

According to Smart Company, the rate cuts signify growing lender competition as a number of financial institutions increase their activity at the lower end of the market.

It noted that Aussie Home Loans is in the process of finalising a $1 billion funding programme while Macquarie Bank issued nearly $500 million worth of low-doc loans earlier this week.

Figures prepared recently for The Sunday Telegraph by Australian Property Monitors show that home prices in Sydney are set to double over the coming decade – a development that could make it increasingly difficult for potential first home buyers to enter the property market.

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