Home-loan War Hots Up As Nab Cuts Rate

The Age

Friday June 14, 1996

Jeremy Flint

National Australia Bank sparked a fresh round of home loan interest-rate cuts yesterday when it carved 0.75 per cent off its variable rate and set a new benchmark low at 9.75 per cent.

Commonwealth Bank, the country's biggest home-lender, was quick to match NAB's deal, while Westpac reduced its variable rate to 9.8 per cent.

ANZ Bank also cut its variable rate to 9.75 per cent.

The regional banks, which are more dependent on home lending than the big banks, are expected to follow next week.

Under the new rates, people with a $100,000 mortgage will pay about $62 a month less.

The NAB and ANZ have axed the application fees on new mortgages for a limited period.

Westpac also launched a no-frills loan at 8.8 per cent, undercutting the 8.9 per cent offered by the leading mortgage manager, Aussie Home Loans.

Westpac will also offer a 12-month 7.95 per cent honeymoon rate for its premium variable-rate mortgage.

CBA set the pace a fortnight ago by slashing its variable rate by 0.6 percentage points to 9.9 per cent.

ANZ and most of the regional banks had matched the CBA's rate, and by yesterday, NAB and Westpac, the country's second and third biggest home-lenders, were the only ones not to have responded.

The banks have had to lower interest rates because of intense competition from non-bank home-lenders, which have been undercutting them by more than 1.5 percentage points.

Mortgage managers, such as Aussie Home Loans and RAMS, are now winning more than 10 per cent of new business.

RAMS' director, Mr Robin Redfern, said the latest round of cuts would further stimulate activity in the market.

He said borrowers now had more incentive to shop around for the best deal.

NAB also aligned its interest rate for residential investment loans with its owner-occupied rate.

Most banks charge an additional percentage point for investment lending, but NAB's group manager, corporate relations, Mr Haydn Park, said the bank wanted to attract new business in this area.

The Commonwealth Bank has set a new standard in energetic marketing in the latest round of the mortgage war.

Its branches now have a variety of prepared advertising panels so they can pounce when the competition lowers their rates.

Within minutes of National Australia Bank lowering its variable rate to 9.75 per cent, Commonwealth branches replaced their 9.9 per cent panel with the 9.75 per cent version.

A Commonwealth spokesman confirmed the bank ``had a lot of different rate cards prepared", but declined to name the lowest rate.

However, The Age believes a 9.25 per cent panel is waiting in branches, just in case the competition hots up.

     Home Loan Wars
     .                    old rate*  new rate*
     Commonwealth Bank      9.9%       9.75%
     Westpac               10.4%       9.80%
     National Aust. Bank   10.5%       9.75%
     ANZ Bank               9.9%       9.75%

     *Premium variable rate home loan

© 1996 The Age

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