08 June 2012 7:18am
Credit Union Australia has launched a new home loan package with the promise that its rate will be 100 basis points below the average of the advertised standard variable home-loan rates of the big banks.
The CUA Rate Breaker package includes no establishment fees, a fee-free transaction account, no annual fee on a Platinum MasterCard, a discount on home and contents insurance and a discount on financial advice.
CUA’s acting general manager for products and marketing, Jason Murray, said the idea was to offer clarity on the pricing of the package discount.
The 100 basis point discount, which has a starting rate of 6.04 per cent, will apply for the life of the loan. The effective discount to the most common home loan rates of big banks will be a lot less than this, given their own discounting.
Lenders have had trouble with regulators in the past when they have tied their rates to other lenders’ rates, but Murray said the product went though compliance without any problems.
CUA is yet to make a change to its standard variable rate following Tuesday’s Reserve Bank rate cut.
ING Direct announced yesterday that it will cut its variable mortgage rates by 20 basis points. The rate on its most popular loan, Mortgage Simplifier, will move to 6.22 per cent.
ANZ is due to announce its home loan pricing today and other major banks, which are likely to have been waiting for ANZ, will follow. The Sydney Morning Herald reports today that Commonwealth Bank "is seeking to undercut NAB's current market position with a plan to drop its standard variable lending rate below that of [NAB]."