Rate cuts target new customers in competitive market
Nearly a dozen lenders, including a major bank, have lowered their mortgage rates in the weeks leading up to the Reserve Bank of Australia’s (RBA) forthcoming policy meeting.
Over the past month, nine financial institutions have adjusted their home loan offerings, with some reductions reaching 25 basis points, mirroring a typical RBA cash rate change.
Westpac, among the largest banks in the country, recently reduced its variable home loan rates, making its owner-occupier rates the most competitive among the Big Four banks for online customers. Its Special Online Offer Flexi First Option Home loan rate was cut by 10 basis points (bps), while investor rates saw a 20bps reduction.
Other lenders, including Aussie, P&N Bank, ME Bank, Bank of China, MOVE Bank, Bankwest, Queensland Country Bank, and Bank of Us, also implemented rate cuts of varying degrees. Some reductions were scaled according to loan-to-value ratio (LVR), meaning the extent of the discount depended on the borrower’s LVR tier.
Sally Tindall (pictured right), data insights director at Canstar, however, noted that these changes may not affect most existing borrowers. “For people with a mortgage, they should definitely sit up and take notice,” she said.
“For starters, these are ‘new customer’ rate cuts, they’re not for loyal, existing customers. They don’t automatically apply to you, unless you pick up the phone, and haggle with your bank.”
Tindall added that the recent home loan rate reductions highlight ongoing competition among lenders seeking to attract new business. “You can use this as evidence that there’s competition in the market, and when there’s competition, banks are often willing to hand out rate discounts that are sometimes lower than what they’ve got advertised on their website,” she said.
“Equally, a lot of banks are very keen to keep you as a customer, and might be able to hand you a rate cut with a bit of negotiating from your side.”
“If your bank won’t budge and you’re on a variable rate loan, it could be worth making the switch. Yes, refinancing is a bit of paperwork but advancements in technology have helped streamline the process. At the end of the day, if you’re lugging around a giant wad of debt on an uncompetitive rate, the savings you could potentially make from switching could make for a pretty epic hourly rate.”
The recent rate changes have prompted speculation about the RBA’s future moves. AMP chief economist Shane Oliver recently suggested that further reductions to the cash rate may be on the horizon. “One in November, another in February and probably another one in May,” he said. “That will take the cash rate down to 2.85%.”
Most of the Big Four banks have delayed their forecasts for the next RBA rate cut. ANZ and CBA both predict a 25bps cut in February 2026, taking the cash rate to 3.35% by early next year. NAB expects a 25bps cut in May 2026, with the cash rate reaching 3.35% by mid-2026. Westpac remains the only major bank anticipating a cut this year, forecasting a 25bps cut in the upcoming meeting, followed by further cuts in February and May, bringing the cash rate to 2.85% approaching the second half of 2026.
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