Personal Loans Snapshot: August 2021

Personal Loans Snapshot: August 2021

We’ve officially reached the month of August, which means it’s time for another personal loans market update.

This month we’ve seen one of the major banks hike up personal loan interest rates while another big bank cut rates instead. We’ve also seen risk-based pricing becoming a bit of a hot new trend among lenders, with ING now adopting the model for its single loan option.

As per the most recent ABS Lending Indicators release, there was a significant 5.6% increase in fixed-term personal loan commitments (seasonally adjusted) in May 2021. A fair jump from March’s numbers which reported a  2.1% increase in new fixed-term personal loans.

The release also revealed a 4.7% rise in new loan commitments for road vehicles and, possibly more interestingly, an 11.6% increase in the value of new loan commitments for personal investment.

Personal loan interest rate changes:

Check out the latest personal loan interest rate and offer changes from the last month:

Interest rate cuts:

  • Loans.com.au has decreased its Used Car Loan interest rate by 100 basis points, bringing it down to 4.67% p.a. (5.22% p.a. comparison rate*).
  • OurMoneyMarket has cut the rate on its Low Rate Personal Loan for excellent credit borrowers by 84 basis points to 5.45% p.a. (6.07% p.a. comparison rate*) and increased the application fee by $100 to $250.
  • Westpac has dropped the fixed rates on its Car Loan down to 6.49% p.a. (7.69% p.a. comparison rate*) and its fixed unsecured Personal Loan, which now sits at 8.99% p.a. (10.17% p.a. comparison rate*).

Other changes:

  • ING has introduced risk-based pricing to its Personal Loan and now offers fixed rates from 7.99% p.a. to 10.99% p.a. (comparison rates from 8.13% p.a. to 11.14%* p.a.) instead of a fixed rate of 8.99% p.a. (9.13% p.a. comparison rate*).
  • St George group has announced that as of the 20th of August, it will no longer offer a variable rate option on its Secured Personal Loan.

Ended offers:

  • Commonwealth Bank has ended the special fixed rate offer on its Unsecured Personal Loan - bringing it back up by 250 basis points to 11.50% p.a. (12.38% p.a. comparison rate*).

Which lenders stand out?

For yet another month, Australian Military Bank, Harmoney, Credit Union SA and Transport Mutual Credit Union offer the lowest personal loan interest rates in the Mozo database - proving time and time again that the smaller banks and credit unions are where it’s at if you’re after competitive rates.

How about big-name lenders?

Despite various movements among major bank personal loan interest rates throughout the past month, it’s worth noting that big bank rates are generally much higher than most competitor lenders.

The Commonwealth Bank’s Unsecured Variable Personal Loan interest rate, for example, currently sits just below 12% - a decent jump from the lowest interest rate in the Mozo database, which sits at 4.15% p.a.

Variable rate big 4 personal loans:

The lowest big bank variable rate personal loan in the Mozo database at the moment is the NAB Personal Loan (Variable, Unsecured), at 6.99% p.a. (7.91% p.a. comparison rate*).

The highest big bank variable rate personal loan in the Mozo database, however, is the Commonwealth Bank Unsecured Variable Personal Loan at 11.50% p.a. (12.38% p.a. comparison rate*).

Fixed rate big 4 personal loans:

In terms of fixed rate loans, the lowest big bank fixed rate in the Mozo database belongs to NAB with its Personal Loan (Fixed, Unsecured), which offers a 3-year fixed rate of 6.99% p.a. (7.91% p.a. comparison rate*).

The big bank with the highest fixed rate personal loan in the Mozo database in July, however, none other than the Commonwealth Bank, with its Unsecured Personal Loan (Fixed), which has a 3-year fixed rate of 11.50% p.a. (12.38% p.a. comparison rate*).

Personal loan rates of note in August:

Written by: Rhianna Dews, Personal Loans writer, 1 August 2021.

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    Mozo Experts Choice 2021
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    Unsecured Personal Loan

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* WARNING: The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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