Rams, Bank of Melbourne and St George undercut parent company Westpac on fixed rates

Rams, Bank of Melbourne and St George have reinforced their unofficial tag as Westpac “budget” brands by all cutting their fixed-rate mortgage products ahead of an expected interest rate cut on May 1.

Mortgage lender Rams has cut its two-year and three-year fixed rate to 5.99%, while its one-year fixed rate of 6.19%

NSW-based St George Bank and Bank of Melbourne have both cut their fixed one-, two- and three-year home loan rates to 5.99% per annum under the Advantage Package for a “limited time”.

Since September last year St George has cut its fixed rates two times, Bank of Melbourne three times and Rams twice.

In contrast, Westpac has not cut its fixed rate mortgage rate since late September last year and offers fixed rates mortgages at a significantly higher rate than its three subsidiary lenders.

On September 27 Westpac cut its fixed rates by 20 basis points, offering a new one-and two-year fixed rate of 6.49%, and 6.44% for three-year term home loans.

In addition to the lower fixed rates, both Bank of Melbourne and St George are promoting other home loan incentives aimed at encouraging borrowers to switch over.

Until 30 April, Bank of Melbourne is offering discounts of up to 0.9% per annum off new standard variable rate home loans for total borrowings over $500,000 as part of Advantage Package. Great lower discounts of up to .85% p.a. are also available for home loan amounts between $250,000 and $500,000 under Advantage package.

St George is offering new customers $700 towards switching costs on selected new home loans under the Advantage Package, if they switch their current loan of $250,000 or more from another financial institution. The switching costs offer applies for new home loan applications received by May 31 and settled by July 15, 2012.

RAMS chief executive Melos Sulicich says there is “simply no better time to forget the banks and forget rate rises” following its fixed rate cuts.

“With greater competition in the lending market, home buyers now have more choice and flexibility than ever before making it the perfect time to make the break from their current lender,” he adds.

Sulicich highlighted recent research by Rams that shows that “62% of home seekers would prefer an alternative lender such as a credit union or non-bank lender”.

“Only 28% of home owners told us that the major banks generally offer the best mortgage deals. By comparison, 44% felt that the various alternative lenders provide a better deal.”