Non-major lenders continue to pass on the Reserve Bank of Australia’s (RBA) latest cut to the official cash rate, with two more announcing reductions in mortgage rates.
Mortgage franchise Yellow Brick Road (YBR) has announced its lowest variable rate ever while ME has also announced a rate cut on variable products following the RBA move last week.
YBR has reduced interest rates on its Empower owner occupied range and Rate Smasher loan by 0.25%, effective immediately for new loans or changing on Wednesday 25 May for existing loans.
The announcement takes YBR’s Rate Smasher Home Loan to a 3.82% comparison rate, the lowest variable rate the group has ever offered. The cut will also see YBR’s Empower Home Loan reduced to a 4% comparison rate.
Yellow Brick Road Group executive chairman Mark Bouris said he never believed he would see home loan rates this low.
“The big banks have been banging on in recent months about the cost of funding and the need to keep rates higher, yet smaller players like Yellow Brick Road whom operate under the same pressures have a rate that’s now well below 4% p.a,” he said.
Non-major lender ME has also announced it will decrease interest rates on its variable home loan products by 5 basis points, effective Monday 16 May.
The decrease will put the bank’s Flexible Home Loan variable reference rate at 5.03% (comparison rate 5.05%).
While the non-major has not passed the RBA’s rate cut on in full, ME CEO Jamie McPhee says this announcement still positions it between 0.32%-0.40% lower than the major banks.
“In making this decision we have sought to balance continued low rates for customers and provide an acceptable return on capital for our shareholders in the context of a significant and sustained increase in the cost of funding over the last six months,” McPhee said
ME also announced reductions to its three-year fixed home loan interest rates for both owner occupier and investor borrowers from 4.29% p.a. to 4.04% (comparison rate 4.82%) and 4.39% to 4.09% (comparison rate 5.20%), respectively.
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