AMP Bank and Credit Union Australia have cut down their variable mortgage interest rates, a move that will encourage Australian homebuyers to compare home loans.
According to a report by Smart Company, CUA recently announced a 25 basis point slash in its variable mortgage rates to 6.37 percent, while AMP Banks also cut 6.27 percent on its mortgage rates. The changes have put the banks’ mortgage rates well below the interest rates offered by the four banks in Australia.
Chris Whitehead, chief executive of CUA, said: "We agree with the Treasury Secretary that the banking sector has become more concentrated over the last few years. There is a crying need for more competition and we are taking an active step in driving that competition."
Smart Company noted that the rate deductions signify growing lender competition, as more financial institutions increase their activities at the lower end of the market.
It also said that Macquarie Bank issued about A$500 million worth of low-doc loans earlier this week and Aussie Home Loans is in the process of finalizing a A$1 billion funding programme.
Recent figures have indicated that home prices in Sydney are set to double over the next decade, a development that could make it increasingly difficult for potential homebuyers to enter into the property market.