A major Australian bank is cutting interest rates on home loans for new customers by increasing a promotional discount, less than a week after the cash rate change.
St George made the announcement on Monday morning, telling homeowners that a range of loans will be affected, with its promotional ‘loan term’ discount increased by 0.05% per annum.
Thus, homeowners will have a rate of 4.20% if they pay the principal and the interest or 5.40% if they pay only the interest.
New home loan applications submitted from Monday will receive the new “loan term” promotional interest rate above.
Last week, St George announced that variable interest rates on home loans would increase by 0.25% per annum for new and existing customers from October 18.
This comes after the Reserve Bank of Australia raised the cash rate from 0.25% to 2.6% last Tuesday.
The cash rate is now at its highest since 2013 after the sixth consecutive rise since May 2022.
The RBA continued its rapid pace of rate hikes to ensure inflation expectations remained anchored around its 2-3% target.
A homeowner’s average monthly repayment is $2,966 per month and $35,592 per year, according to Finder, with the latter figure increasing by $8,820 over the past six months.
A national focus group on finance and mortgage brokers has revealed that people who have recently experienced a marriage or relationship breakdown will be greatly affected.
Finance Brokers Association of Australia chief executive Peter White said this was the biggest concern of brokers surveyed.
He said the tightening of credit scores was making recently divorced or separated people pay the price, calling it “grossly unfair”.