Personal Loans Snapshot: September 2021

With Spring finally here, it’s now time for our September 2021 personal loans market update.

Quite a number of personal loan interest rate changes have taken place over the past month, as well as several other offer changes, such as various application fee waivers. 

As reported in last month’s snapshot, there’s also been a recent trend catching on around risk-based pricing, with ING adopting the model for its single loan option.

According to the latest ABS Lending Indicators release, there was a whopping 14.2% increase in fixed-term personal loan commitments (seasonally adjusted) in July 2021. This was a massive leap from May, which had a  5.6% increase in new fixed-term personal loans.

The release also revealed a 2.9% increase in new loan commitments for road vehicles, as well as an unbelievable 92.8% spike in the value of new loan commitments for personal investment.

Personal loan interest rate changes:

Here’s what’s been happening in terms of personal loan interest rate and offer changes as of late:

Interest rate cuts:

• Australian Military Bank has cut 50 basis points off the variable starting rate for applicants with excellent credit on its Car Loan, bringing it down to 3.99% p.a. (4.86% p.a. comparison rate*).
• Community First Credit Union has dropped the variable rates on two of its loan options. Both its Home Improvement Loan and Green Loan now sit at 3.99% p.a. (4.99% p.a. comparison rate*).
• Easy Street has slashed 100 basis points off its fixed-rate Unsecured Personal Loan, dropping it down to 7.99% p.a. (8.26% p.a. comparison rate*).
• Illawarra Credit Union cut 200 basis points off its Green Unsecured Personal Loan rate, and 26 basis points off its Green Car Loan Package - bringing both rates down to 3.99% p.a. (5.15% p.a. comparison rate*). 
• QBANK took 114 basis points off its variable rate Discounted Car Loan, which now sits at 4.85% p.a. (5.48% p.a. comparison rate*). 

Other changes:

• The Commonwealth Bank is waiving the $250 application fee on its unsecured Personal Loan until the 7th of September 2021

Interest rate increases:

• Plenti increased both the fixed and variable rates on its unsecured Personal Loan for applicants with Excellent Credit by 95 basis points, bringing them to 6.39% p.a. (6.39% p.a. comparison rate*).

Which lenders stand out?

Once again, the lenders offering the lowest personal loan interest rates in the Mozo database are Harmoney, Credit Union SA and Transport Mutual Credit Union, with the addition of Community First Credit Union after its recent round of interest rate changes.

This once again proves that the smaller banks and credit unions are the place to go if you’re wanting competitive rates.

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.

For example, right now, the Commonwealth Bank’s Unsecured Variable Personal Loan interest rate sits just below 12% - a noticeable difference when compared to the lowest interest rate in the Mozo database, which sits at 3.99% p.a.

Variable rate big 4 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), at 6.99% p.a. (7.91% p.a. comparison rate*).

The highest big bank variable rate personal loan in the Mozo database, on the other hand, 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:

When it comes to fixed-rate personal loans, the big bank with the lowest fixed rate in the Mozo database is 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*).

However, the highest big bank fixed rate personal loan in the Mozo database belongs to 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 September:

• Lowest variable rate unsecured personal loan: 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: Harmoney - Unsecured Personal Loan (Fixed) - 5.35% p.a. (6.15% 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 September 2021.