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Non-major bank HSBC Australia (HSBC) will be reducing its variable rates for owner-occupied principal and interest repayment loans to 1.97 per cent per annum (comparison rate 1.98 per cent per annum), according to a statement from the bank.
This reduction is expected to come into effect from 8 November.
According to the non-major bank, the interest rate of 1.97 per cent will be for owner-occupied Home Value home loans with principal and interest repayments and an LVR of at least 70 per cent. Currently, HSBC offers owner-occupied loans with principal and interest repayments (with an HSBC Home Loan Package) at 2.29 per cent per annum (2.74 per cent per annum comparison rate).
Speaking of the variable rate changes, HSBC head of wealth and personal banking Jessica Power said: “This is among the lowest variable rates we’ve ever offered in Australia, so provides both affordability and flexible repayment options.”
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The development stands as another instance of banks announcing cuts to their variable interest, with ING and Gateway Bank both announcing reduced rates recently.
However, this trend runs parallel to reports of banks increasing fixed interest rates. This week, Westpac and Commonwealth Bank of Australia both announced interest rate increases for fix rates, as speculation mounts that the Reserve Bank of Australia (RBA) may increase rates next year.
Earlier this year, National Australia Bank (NAB) introduced changes to the fixed rates on its NAB Choice package and Tailored package, raising five-year interest rates by 0.30 per cent, as well as three-year (0.10 per cent) and four-year rates (0.25 per cent).
Mortgage Choice and Smartline chief executive Susan Mitchell said in September she had noticed a growing trend towards fixed rates, with the “proportion of borrowers opting to fix part of their mortgage steadily increasing throughout 2021”, noting that 41 per cent of all approved in August had a fixed component.
“Mortgage Choice home loan approval data shows a growing trend towards refinancing since March this year, with 42 per cent of loans for the purpose of refinancing – this is slightly higher than 12 months ago where 41 per cent of loans were for the purpose of refinancing,” Ms Mitchell added.
[Related: LATEST PODCAST: Rates, migration and buffers]
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