Personal Loans Snapshot: July 2021

Personal Loans Snapshot: July 2021

Welcome to a new financial year, folks. Let's dive straight into our first personal loans market update of the new financial year:

This month we’ve seen quite minimal action in terms of personal loan interest rate change. However, we have seen a major bank subsidiary introduce risk-based pricing for its products, which led to significantly lower headline rates.

According to the most recent ABS Lending Indicators release, in April 2021 there was a 4.8% increase in new fixed-rate personal loan commitments (seasonally adjusted). This is quite a significant increase from March 2021 which saw a  2.1% increase in new fixed-term personal loans.

On that note, the release also reported a 3.6% increase in new loan commitments for road vehicles - slightly less than March 2021 which saw a 4.5% increase.

Personal loan interest rate changes:

Here are some of the personal loan interest rate changes that have occurred since last month:

Interest rate cuts:

  • Harmoney cut the starting fixed rates on both its Low Rate Car Loan and Unsecured Personal Loan by 164 basis points, bringing them down to 5.35% p.a. (6.14% p.a. comparison rate*).
  • People’s Choice lowered the fixed rate on its Unsecured Personal Loan by 100 basis points to 7.99% p.a. (9.72% p.a. comparison rate*).
  • We also saw SocietyOne cut the fixed starting rate on its Car Loan for excellent credit customers by 44 basis points to 5.95% p.a. (5.95% p.a. comparison rate*). The application fee for customers with less than excellent credit scores went up by $100 to $595.

Other changes:

St. George Group introduced risk-based pricing to both its Secured and Unsecured personal loans:

  • The Secured Personal Loan variable starting rate is now down to 6.49% p.a. with a maximum of 12.99% p.a. (7.61% p.a. to 14.06% p.a. comparison rate*) while the fixed option now ranges from 4.99% p.a. to 12.99% (6.13% p.a. o 14.06% p.a. comparison rate*).
  • The variable rate on the Unsecured Loan starts from 8.89% p.a. to 18.90% p.a. (9.99% p.a. to 19.93% p.a. comparison rate*) and the fixed option is from 6.89% p.a. to 18.90% p.a. (8.01% p.a. to 19.93% p.a. comparison rate*).

Which lenders stand out?

As of July 2021, Australian Military Bank, Harmoney, Credit Union SA and Transport Mutual Credit Union are the lenders with the lowest personal loan interest rates in the Mozo database. Once again we see that smaller mutual banks and credit unions are offering more competitive rates.

How about big-name lenders?

While a few different big bank rate changes have popped up over the last month, be aware that big bank personal loan interest rates tend to sit higher than most competitor lenders.

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

Variable rate personal loans:

At this point in time, the ‘lowest big bank variable rate personal loan’ in the Mozo database is the NAB Personal Loan (Variable, Unsecured), which underwent a 5.70% basis-point cut on 21 April 2021, setting it at 6.99% p.a. (7.91% p.a. comparison rate*).

As for the highest big bank variable rate personal loan in the Mozo database, this would be the Commonwealth Bank Unsecured Variable Personal Loan at 11.50% p.a. (12.38% p.a. comparison rate*).

Fixed rate personal loans:

When it comes to fixed rate loans, the lowest big bank fixed rate in the Mozo database belongs to NAB with its Personal Loan (Fixed, Unsecured) which saw a 5.70% basis-point cut to its on 21 April 2021, bringing it down to a 3-year fixed rate of 6.99% p.a. (7.91% p.a. comparison rate*).

In July 2021, the big bank with the highest fixed rate personal loan in the Mozo database is Westpac with its (Fixed, Unsecured) Personal Loan, which has a 3-year fixed rate of 9.99% p.a. (11.16% p.a. comparison rate*).

Personal loan rates of note in July:

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

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  • placeholder
    Personal Loan

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    interest rate
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    6.39% p.a.to 8.19% p.a.based on $30,000
    over 5 years
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    Mozo Experts Choice 2022
    Personal Loan

    Unsecured, Fixed

    interest rate
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    Monthly repayment
    4.99% p.a.to 14.99% p.a.
    4.99% p.a.to 14.99% p.a.based on $30,000
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  • placeholder
    Unsecured Personal Loan

    Fixed

    interest rate
    comparison rate
    Monthly repayment
    5.35% p.a.to 19.09% p.a.
    6.14% p.a.to 19.99% p.a.based on $30,000
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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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