While much of the competitive pressure in the homeloans market currently is in the two-year fixed rate area, Superbank has launched a heavily discounted floating rate product and is guaranteeing it won’t rise before June next year.
It is similar to Westpac’s capped rate loans, including the promise that if wholesale interest rates start falling then so will the rate Superbank charges for the new product.
Superbank is charging 7.49% on its product compared with Westpac’s capped rates which range from 7.95% for one year to 8.05% for three years, Westpac’s 8.6% floating rate and the other major banks’ floating rates of 8.5%.
One of Superbank’s conditions is that the entire loan must be at the floating rate.
Those wishing to fix part of their loan and to have the rest at a floating rate will pay Superbank’s standard 8.5% floating rate.
Superbank chief operating officer James Munro dismisses comparisons with Westpac’s capped rate loans. "Our red is different from their red. Their’s is a capped rate for a specific term. It’s somewhere between a fixed rate and a variable rate.
"This (Superbank’s) is a variable rate product with all the advantages of a variable rate and with few of the disadvantages such as price," Munro says.
He questions whether fixing for two years is appropriate in the current environment when the Reserve Bank’s official cash rate is either at or near its peak.
Telephone research Superbank commissioned which was conducted in early October found that the biggest worry for 15.5% of those surveyed was being stuck with a fixed-rate loan when interest rates are falling.
If rates stay stable or start to decline, Superbank is likely to extend its guarantee, he says. "It’s a nice option for a group of people who want to float but don’t want to pay the massive premiums you have to pay for floating," he says.
