Personal loan overview: July 2021
Welcome to a new financial year, folks. Let’s dive right into our first update of the new fiscal year personal loan market:
This month we have seen pretty minimal action in terms of changing personal loan interest rates. However, we have seen a large banking subsidiary introduce risk-based pricing for its products, which has led to significantly lower interest rates.
Whichever is most recent Publication of ABS loan indicators, in April 2021, new fixed rate personal loan commitments (seasonally adjusted) increased by 4.8%. This is a fairly significant increase from March 2021 which saw a 2.1% increase in new fixed-term personal loans.
On this note, the press release also reports a 3.6% increase in new loan commitments for road vehicles – slightly less than in March 2021 which had seen an increase of 4.5%.
Personal loan interest rate changes:
Here are some of the personal loan interest rate changes that have occurred since the past month:
Lower interest rates:
- Harmoney reduced the starting fixed rates on its low-rate auto loan and unsecured personal loan by 164 basis points, down to 5.35% pa (6.14% pa benchmark *).
- People’s Choice lowered the fixed rate of its Unsecured Personal Loan by 100 basis points to 7.99% per annum (comparison rate of 9.72% per annum *).
- We have also seen SocietyOne reduce its fixed starting rate on auto credit for Excellent Customers by 44 basis points to 5.95% per annum (compare rate of 5.95% per annum *). Application fees for clients with poor credit scores increased from $ 100 to $ 595.
The St. George Group has introduced risk-based pricing for its secured and unsecured personal loans:
- The variable starting rate for Secured Personal Loan has now fallen to 6.49% pa with a maximum of 12.99% pa (7.61% pa to 14.06% pa comparison rate *) while the fixed option varies now from 4.99% pa to 12.99% (6.13% pa o 14.06% pa comparison rate *).
- The variable rate on the Unsecured Loan starts from 8.89% pa to 18.90% pa (comparison rate from 9.99% pa to 19.93% pa *) and the fixed option is 6.89% pa at 18.90% pa (8.01% pa at 19.93% pa rate comparison *).
Which lenders stand out?
As of July 2021, the Australian Military Bank, Harmoney, Credit Union SA and Transport Mutual Credit Union have been the lenders with the lowest personal loan interest rates in the Mozo database. Again, we find that smaller mutual banks and credit unions offer more competitive rates.
What about reputable lenders?
While there have been a few big bank rate changes over the past month, be aware that major banks’ personal loan interest rates tend to be higher than those of most competing lenders.
For example, the interest rate for Commonwealth Bank unsecured variable personal loans currently sits just below 12%, which is quite a far cry from the lowest interest rate in the Mozo database, which is stands at 4.15% per year.
Variable rate personal loans:
Currently, the “lowest variable rate personal loan from large banks” in the Mozo database is the NAB (variable, unsecured) personal loan, which has suffered a 5.70% point drop. base on April 21, 2021, setting it at 6.99%. pa (7.91% pa comparison rate *).
As for the highest variable rate personal loan from large banks in the Mozo database, it would be the Commonwealth Bank unsecured variable personal loan at 11.50% per annum (comparison rate of 12.38% per year*).
Fixed rate personal loans:
Regarding fixed rate loans, the lowest fixed rate of the big banks in the Mozo database belongs to NAB with its personal loan (fixed, unsecured) which has had its base rate reduced by 5.70 % on April 21, 2021, reducing it to a 3-year fixed rate of 6.99% pa (7.91% pa comparison rate *).
As of July 2021, the large bank with the highest fixed rate personal loan in the Mozo database is Westpac with its personal loan (fixed, unsecured), which has a 3-year fixed rate of 9.99% pa (11.16% pa comparison rate *).
Personal loan rate to note in July:
Written by: Rhianna Dews, Personal Loans Writer, July 1, 2021.
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^ See information on the Mozo Experts Choice Personal Loan Awards
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