Three small lenders cut variable rates without RBA prompt: RateCity

Three small lenders led by Holiday Coast Credit Union have cut their variable rates outside of any cash rate cut by the Reserve Bank, according to mortgage comparison website RateCity.com.au. 

Holiday Coast Credit Union, which has 15 branches on the NSW Holiday Coast and in the Hunter region, cut several variable loans by 0.20 percentage points. 

It’s lowest variable rate offering is 5.62% offered on its capped home loan product. 

The two other lenders to cut their variable rates were BMC Mortgage, which cut several loans by 0.10 percentage points and IMB Building Society, which cut one home loan by 0.05 percentage points. 

According to RateCity.com.au, a 0.20 percentage point discount can make a big difference on home loan repayments. 

For instance, for a $300,000 home loan dropping from 5.9% to 5.7% could mean a saving of $456 per year or $13,680 over 30 years. 

RateCity.com.au expects more lenders to cut their variable rates. 

Michelle Hutchison, spokesperson for RateCity, sus it's the first time RateCity recorded three lenders cut variable home loan rates out-of-cycle. 

"While there have been several rate increases out-of-cycle, we've never seen lenders drop variable home loan rates while the cash rate remains stable. 

"Lenders have room to move after keeping on average 0.42 percentage points of the Reserve Bank’s 1.75 percentage point cut to the cash rate since November 2011 from variable home loan borrowers. 

“If these three lenders can afford to cut variable rates out-of-cycle, other lenders – including the major banks – have no excuse to sit on their hands,” she says.