How do ANZ, CBA, NAB and Westpac compare?
With the new fiscal year around the corner and many Australians stuck at home right now, now is a good time to check your finances, including your home loan.
Chances are your mortgage is with one of ANZ, Commonwealth Bank, NAB, or Westpac, which are the latest according to APRAs Statistics of the authorized depository institutions, control around 77% of the residential real estate mortgage market.
However, these big lenders don’t always have the most competitive home loan deals – at least not when it comes to interest rates. So when you are with the big four, is there any way you can save money on your mortgage?
We’d like to investigate that question below by looking at how the big four banks compare with the rest of the market in terms of owner-occupier mortgage rates.
Behind the pack with variable rates
Let’s start with locking loans at a floating rate.
Most homeowners with an adjustable mortgage will have noticed a drop in their interest rate in recent years as banks have responded to several Reserve Bank (RBA) cuts by lowering their own rates.
Despite the last RBA cut in November, we’ve continued to see a drop in floating rates over the past seven months, with the average floating rate for owner-occupiers on the Mozo database falling from 3.34% to 3.24% over that period .
As you’d expect, many lenders changed their rates during this time, but there was almost no movement from the big four. The cut ANZ made on their Breakfree Package in April is actually the only variable rate cut from any of the majors since September 2020!
As a result, the Big Four’s average owner-occupier variable rate is currently 3.53% – significantly higher than our database average.
There is currently also over 60 lenders in the Mozo database that offer a comparable home loan with a variable interest rate that is lower than the best available of the big four: the 2.69% (2.69% comparative rate *) with NAB’s basic home loan with variable rate Interest rate.
But what does it all mean? Well, many major bank mortgage customers may be paying more than they have to.
Large Banks vs. Mozo Database (Average and Lowest Floating Rates) – July 1, 2021
|Variable price||Monthly repayments||Total interest|
|Big Four (Average)||3.53%||$ 2,326||$ 158,242|
|Mozo database (average)||3.22%||$ 2,263||$ 143,048|
|Big four (lowest)||2.69% (2.69% comparison rate *)||$ 2,157||$ 117,639|
|Mozo database (lowest)||1.99% (2.05% comparison rate *)||$ 2,022||$ 85,193|
Note: The variable home equity interest in the table above is from loans that are recorded in the Mozo database. They are based on the following scenario: A owner-occupier makes principal and interest repayments for a loan amount of USD 400,000 over 20 years with an LVR
As the table shows, a borrower who can refinance from a floating rate of 3.53% to a lower rate of 3.22% could cut their monthly repayments by $ 63 and a sizable $ 15,194 over the life of their loan -Save dollars in interest.
This is of course based on the specific scenario described above, but you can work out your own numbers using our mortgage calculator.
Keeping up with fixed prices
What About Fixed Home Loans?
Well, a lot has been cut and changed in the last few months, particularly on longer-term fixed rates, which many lenders – including the big four – have been raising since their low in March.
By and large, however, the fixed prices are very low. Certainly they are among the hottest in many years, something that has not escaped the many borrowers who have locked themselves up.
As opposed to floating rates, the big banks got it right when it came to being competitive with fixed rates.
For example, the 4 year fixed rates with the fixed rate home loan from CBA (Wealth Package) and the bespoke home loan from NAB (Fixed, Choice Package) are currently some of the lowest in our database.
In fact, the Big Four average is currently below the average fixed rate in the Mozo database for terms of 1, 2, 3 and 4 years.
Large Banks vs. Mozo Database (Average and Lowest Fixed Rates) – July 1, 2021
|1 year||3 years||5 years|
|Big Four (Average)||2.16%||2.18%||2.78%|
|Mozo database (average)||2.32%||2.33%||2.75%|
|Big four (lowest)||2.04% (3.33% comparison rate *)||2.04% (3.18% comparison rate *)||2.49% (3.61% comparison rate *)|
|Mozo database (lowest)||1.67% (3.84% comparison rate *)||1.79% (3.33% comparison rate *)||2.24% (2.33% comparison rate *)|
Note: The fixed home interest rates in the table above are from loans that are recorded in the Mozo database. They are based on the following scenario: An owner-occupier makes principal and interest repayments on a loan of USD 400,000 with an LVR
However, as the table above shows, there are even lower fixed rate home loans available in the market. So if you are thinking of setting an interest rate, it can always be worth doing your research and comparing offers from different lenders.
CONNECTED: Rate hike will come sooner than expected, says CBA
Are you ready to see if switching to a lower interest rate can save you money?
Start your comparison today by checking out the many loans and lenders listed on our handy home loan refinance tables, or get started right away by catching your eyes on some of the hot deals below!
^ See Mozo Experts Choice Home Loan Awards information
Mozo provides general product information. We do not consider your personal goals, your financial situation or your needs and we do not recommend any particular product to you. You should make your own decision after reading the PDS or the offer documentation or after seeking independent advice.
While we pride ourselves on covering a wide range of products, we don’t cover every product on the market. If you decide to apply for a product through our website, you are dealing directly with the supplier of that product and not with Mozo.