Personal Loans Snapshot: October 2021

As we begin to reach the tail-end of the year, it’s now time to dive into our October 2021 personal loans market update.

Last month we saw fewer personal loan interest rate and offer changes take place in comparison to the previous months. Of the few changes that occurred, most of which were rate cuts and a $250 application fee reinstatement from the Commonwealth Bank on its Secured Personal Loan.

We’ve also seen Bankwest launch a long term heavily discounted rate on its unsecured personal loan option, of 8.99% p.a. (9.33% p.a. comparison rate*) available to eligible customers until 30 June 2022.

More broadly, over the past few months, there’s been a developing trend around the introduction of risk-based pricing among lenders - such as ING who adopted the model on its single loan option.

In other news, the most recent ABS Lending Indicators release revealed a 2.5% drop in fixed-term personal loan commitments (seasonally adjusted) in August 2021. A change in pace from July which saw a massive 14.2% increase in new fixed-term personal loans when compared to the month prior.

The release also reported a 6.4% decrease in new loan commitments for road vehicles, as well as a hefty 16.7% rise in the value of new loan commitments for personal investment.

Personal loan interest rate changes:

Let’s take a look at what’s been going on recently with personal loan interest rates and offer changes:

Interest rate cuts:

• Alex Bank recently chopped a whopping 46 basis points off its fixed unsecured Personal Loan, making it the lowest rate of its kind in the Mozo database (at time of writing) at 4.99% p.a. (4.99% p.a. comparison rate*).
• Bankwest has just slashed a solid 200 basis points off its fixed Unsecured Personal Loan, bringing it down to 8.99% p.a. (9.33% p.a. comparison rate*). This new reduced rate will be available to eligible customers until 30 June 2022.
• Community First Credit Union has taken a significant 215 basis points off its fixed Car Loan rate, now sitting at 5.34% p.a. (6.11% p.a. comparison rate*).
• Liberty has cut 50 basis points off both its fixed and variable options for its Drive Car Loan, bringing them down to 5.99% p.a. (8.08% p.a. comparison rate*).
• Teachers Mutual Bank has reduced its unsecured All Purpose Loan fixed interest rate down by 96 basis points, bringing it down to 8.99% p.a. (9.13% p.a. comparison rate*). It also took 120 basis points off its variable rate option, which now comes down to 11.99% p.a. (12.14% p.a. comparison rate*).

Other changes:

• The Commonwealth Bank has officially reinstated the $250 application on its Secured Personal Loan.

Which lenders stand out?

This month we see that the lenders with the lowest personal loan interest rates in the Mozo database are yet again Community First Credit Union, Credit Union SA and Transport Mutual Credit Union, with the addition of Alex Bank following its recent rate changes.

Once again, proving that smaller banks and credit unions are where to go for a more competitive rate.

How about big-name lenders?

While there have been several shifts in major bank personal loan interest rates over the past few months, be aware that big bank rates tend to sit much higher than most competitor lenders.

Despite some movement across big bank personal loan interest rates over the past few months, keep in mind that the major banks tend to offer much higher rates than most of their competitors.

For example, at present, the Commonwealth Bank’s Unsecured Variable Personal Loan interest rate sits just under 12% - quite a significant jump when compared to the lowest interest rate in the Mozo database of 3.99% p.a.

Variable rate big 4 personal loans:

Right now, the lowest big bank variable rate personal loan interest rate in the Mozo database is the NAB Personal Loan (Variable, Unsecured), 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, that would be 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 personal 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 highest fixed-rate big bank personal loan in the Mozo database, on the other hand, is the Commonwealth Bank’s 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 October:

• Lowest variable rate unsecured personal loan: A tie between Community First Credit Union - Green Loan (up to 10 years, Variable, Unsecured) - 3.99% p.a. (4.99% p.a. comparison rate*) and Community First Credit Union - Home Improvement Loan (up to 10 years, Variable, Unsecured) - 3.99% p.a. (4.99% p.a. comparison rate*)
• Lowest fixed rate unsecured personal loan: Alex Bank - Personal Loan (Unsecured, Fixed) - 4.99% p.a. (4.99% p.a. comparison rate*)
• Lowest variable rate secured personal loan: Transport Mutual Credit Union - GreenRoad Hybrid & Electric Cars (Variable) - 4.74% p.a. (5.04% p.a. comparison rate*)
• Lowest fixed rate secured personal loan: Credit Union SA - Online-only Special Fixed Rate Personal Loan (Secured) - 4.25% p.a. (4.73% p.a. comparison rate*)

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