With ANZ announcing its home loan rate cut last Friday, our Product Manager David Bryde takes a look at how much better off The Greater’s customers are than those who have a mortgage with the major banks.
After its monthly interest rate review, ANZ announced last Friday it will cut rates on its home loans by 20 basis points. This brings an end to the recent cuts made by the major financial institutions since the Reserve Bank of Australia reduced the cash rate by 25 basis points on 2 October 2012.
Have a look at this handy chart (Table 1) I have prepared showing the home loan rates of The Greater and the major banks. The Greater’s Standard Variable Home Loan rate is 46 points (0.46%) lower than Westpac’s and 38 points (0.38%) lower than the average of the Big 4’s rates. The Greater also has the lower Basic Home Loan rate.
Table 1: Comparison of The Greater’s and the major banks’ standard and basic home loan rates. #
The rate you should be paying attention to when comparing rates is the Comparison Rate, which is in brackets. This rate has to appear in advertisements by financial institutions but it is not always shown on some of the interest rate comparison websites. The comparison rate takes into account fees and charges you will pay on the loan.
Notice how the much higher the Commonwealth Bank’s Basic Home Loan is than the others when you look at the comparison rate or true rate. The advertised rate is 6.09% but the true rate is 6.23%.
Table 2 shows why looking at comparison rates is important. It means money in your pocket. Greater customers with a Standard Variable Home Loan are paying $90 a month less than Westpac customers. Greater customers with a Basic Home Loan are paying $47 a month less than a Commonwealth Bank customer. That is a lot of dough each month to be throwing away or saving, depending upon with whom you bank.
Table 2: Monthly repayments on $300,000 loan over 30 years
So now what?
If you are a Greater customer then sit back and relax in the knowledge that you chose a better value home loan. (Or you can go out for coffee and cake or take in a movie with your savings.) If you are a bank customer, give us a call on 13 13 86 and we can show you how easy it is to switch to a better deal.
# Rates are new rates as at 15 October, 2012. They may not yet have come into effect for existing customers. Our comparison excludes products offered by the banks that are for new borrowings only. The comparison rates provided apply only to a $150,000 loan over 25 years. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.
What would you do with an extra $90 per month? Tell us below.