State Bank Cuts Rate To 5.5% In Loans War
Sydney Morning Herald
Tuesday August 3, 1993
State Bank of NSW has come out with all guns firing in the home-loan war, cutting its one-year capped rate by one percentage point to 5.5 per cent, effectively the lowest rate offered by any of the banks.
The move by State Bank comes on the heels of aggressive home-loan cuts made by other banks after the Reserve Bank reduced official cash rates last Friday
National Australia Bank and Westpac Banking Corp led other banks by cutting their benchmark home-loan rate by 75 basis points to 8.75 per cent, more than the Reserve Bank's half a percentage point cut.
State Bank has not followed NAB and Westpac, trying instead to capture the attention of first-time home owners and those looking to refinance their home loans through its special deals.
It cut its key variable home loan rate to 8.95 per cent from 9.5 per cent, effective from October 1, 1993, in line with ANZ and Commonwealth Bank.
State Bank has been at the forefront of the one-year capped loans and as a result has been picking up market share in NSW. Its new rate of 5.5 per cent moves to its variable rate of 8.95 per cent after 12 months.
The new rate also requires a $600 establishment fee. State Bank also cut its rate offered with no fees by one percentage point to 6.25 per cent, capped for 12 months.
The State Bank managing director, Mr John O'Neill, was confident that these interest rate reductions would encourage economic activity.
"I have no doubt that, in providing incentives of this nature, we are making a real difference to the lot of the average Australian whose home purchase is still considered the most important financial decision taken."
Banks have been quick to pass on the benefits of an interest-rate cut to home owners but have been slower in providing business with relief.
Westpac and State Bank announced yesterday that they had cut their key business lending rate by half a percentage point.
© 1993 Sydney Morning Herald