Australia’s largest mutual bank has broken ranks with competitors by offering a home loan under four per cent.
Heritage Bank today announced the lowest rate in its 139-year history at 3.99 per cent with a 5.58 per cent comparison rate.
Heritage Bank chief executive John Minz said there would likely be few occasions in Australian history where interest rates would be as low as they currently are.
“We combed through 139 years of our own ledgers to see if we’d ever offered a lower rate, but even at the peak of the Great Depression in 1932, our rates for advances to buy property were typically around five per cent per annum,” Mr Minz said.
"Our rates went close to four per cent per annum immediately after the Second World War, but then increased as the Reserve Bank of Australia took over the implementation of monetary policy in 1960,” he said.
“We also looked at historical newspaper articles and Australian Bureau of Statistics data to see if we could find any evidence of other banks’ fixed home loan annual percentage rates ever being lower, but found nothing.”
Heritage is able to offer the new one-year fixed home loan rate because it is customer-owned, unlike the majors who are focused on returning profits to shareholders, Mr Minz said.
“That mutuality means Heritage Bank can focus on generally delivering more competitive rates than the big four banks,” he said.
The lender’s entire offering of fixed rate loans are currently under the five per cent mark, with its two-year rate fixed at 4.49 per cent (5.53 per cent comparison rate), three-year rate fixed at 4.89 per cent (5.54 per cent comparison rate) and five-year rate fixed at 4.99 per cent (5.47 per cent comparison rate).