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A mutual lender has cut its fixed rate home loans to 50 basis points below those of the major banks.
As the Reserve Bank meets today to decide the official cash rate for another month, Greater Building Society has jumped the gun by slashing its three-year fixed rate home loan to 4.44 per cent – half a percent lower than the equivalent rate on offer by the big four banks.
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The lender also cut its five-year fixed rate to 4.64 per cent, 35 basis points cheaper than the majors.
Greater Building Society CEO Scott Morgan said fixed rates continue to be popular both for residential and investment loans with uncertainty about whether official rates will rise or fall in the longer term.
Mr Morgan said borrowers can gain a rate cut from the Greater regardless of whether the RBA cuts official rates this afternoon.
However, he warned consumers taking out any fixed rate home loan to check the loan features, particularly the rate that the loan will revert to once the fixed rate period is over.
“Some financial institutions have high variable rates and some place you on a higher than usual variable rate once your fixed term ends, a practice we call the “revert rate rort”, Mr Morgan said.
“At the Greater, we’re straightforward with our customers so our packaged fixed rate loans revert to the low packaged variable rate,” he said.
Mr Morgan said a customer taking out a $300,000, five-year fixed rate packaged home loan with the Greater (even making interest-only repayments) will be $5,250 better off than if they were to take out such a loan through a major bank.
The Greater’s packaged (Ultimate) home loan has no establishment fee and includes a fee-free transaction account, discounted insurance, a free initial financial planning consultation, and a linked credit card with the annual fee waived.
[Related: ME Bank makes 'aggressive' 25-point interest rate cut]
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