Loans.com.au today announced it will reduce the interest rate on all settled variable rate loans by 0.13%, effective Saturday 20th August.
The decision follows a comprehensive review of our funding costs, in light of the Reserve Bank’s 0.25 per cent cut to the overnight cash rate.
It also considers an offsetting rise in the price of funding from the Residential Mortgage Backed Securities (RMBS) market, which is the ultimate source of our funding.
As can be seen in the graph below, funding costs in this market have risen since late 2015, despite cuts by the RBA to the overnight cash rate.
For loans.com.au and other lenders, this is placing additional costs pressure on our portfolio.
We believe the 0.13 per cent cut - which is above the industry average - strikes a fair balance, maintaining our position as a non-bank lender with market leading rates.
Loans.com.au will continue to provide strong competition to the banks, ensuring that Australian borrowers have access to cut-price home loans.