We’ve officially hit August, which means it’s time for another personal loan market update.
This month we saw one major bank raise interest rates on personal loans while another major bank lowered rates instead. We have also seen risk-based pricing become a new trend among lenders, with ING now embracing the model for its unique loan option.
According to the most recent Publication of ABS loan indicators, there was a significant 5.6% increase in (seasonally adjusted) fixed-term personal loan commitments in May 2021. A good jump from the March figures which showed a 2.1% increase in new personal fixed-term loans.
The statement also revealed a 4.7% increase in new loan commitments for road vehicles and, perhaps more interestingly, an 11.6% increase in the value of new loan commitments for personal investment.
Personal loan interest rate changes:
Check out the latest personal loan interest rate and offer changes from last month:
Lower interest rates:
- Loans.com.au lowered its used car loan interest rate by 100 basis points, bringing it down to 4.67% per annum (comparison rate of 5.22% per annum *).
- OurMoneyMarket cut the rate on its Low Rate Personal Loan for Great Credit Borrowers by 84 basis points to 5.45% per annum (comparison rate 6.07% per annum *) and increased the application fee from $ 100 to $ 250.
- Westpac has lowered the fixed rates on its car loan to 6.49% per annum (comparison rate of 7.69% per annum *) and its unsecured fixed personal loan, which now stands at 8.99% per annum (comparison rate of 10.17% per year *).
- ING has introduced risk-based pricing to its Personal Loan and now offers fixed rates of 7.99% pa to 10.99% pa (comparison rate of 8.13% pa ââto 11.14% * pa) at instead of a fixed rate of 8.99% pa (9.13% pa ââcomparison rate *).
- The St George group has announced that as of August 20, it will no longer offer a variable rate option on its Secured Personal Loan.
- Commonwealth Bank has ended the special fixed rate offer on its unsecured personal loan – reducing it by 250 basis points to 11.50% per annum (benchmark rate of 12.38% per annum *).
Which lenders stand out?
For another month, the Australian Military Bank, Harmoney, Credit Union SA and Transport Mutual Credit Union are offering the lowest personal loan interest rates in the Mozo database – repeatedly proving that small banks and Credit unions are where they are if you’re after competitive rates.
What about reputable lenders?
Despite various movements in the personal loan interest rates of the major banks over the past month, it should be noted that the rates of the major banks are generally much higher than those of most competing lenders.
The interest rate on Commonwealth Bank unsecured variable personal loans, for example, currently sits just below 12% – a decent jump from the lowest interest rate in the Mozo database, which is located at 4.15% pa
Big 4 variable rate personal loans:
The lowest variable rate personal loan from major banks currently in the Mozo database is the NAB (Variable, Unsecured) personal loan, at 6.99% per annum (comparison rate of 7.91% per annum * ).
However, the highest variable rate personal loan from the major banks in the Mozo database is the Commonwealth Bank Unsecured Variable Personal Loan at 11.50% per annum (compare rate of 12.38% per annum * ).
Big 4 fixed rate personal loans:
In terms of fixed rate loans, the lowest fixed rate of the major banks in the Mozo database belongs to NAB with its Personal Loan (Fixed, Unsecured), which offers a 3-year fixed rate of 6.99%. pa (7.91% pa comparison rate *).
The big bank with the highest fixed rate personal loan in the Mozo database in July, yet none other than the Commonwealth Bank, with its Unsecured Personal Loan (Fixed), which has a 3-year fixed rate of 11 , 50% per year (12.38% pa comparison rate *).
Personal loan rate to note in August:
Written by: Rhianna Dews, Personal Loans Writer, August 1, 2021.
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